STEADFAST. ADVANCING SUSTAINABLY.

In the year under review, PCG continued to prioritise the health and safety of our people. Through our generative Health, Safety and Environment (HSE) culture and discipline towards upholding HSE Excellence, I am pleased to report that we recorded ZERO fatality and ZERO Major Fire. Regrettably, however, we recorded two Lost Time Injuries (LTI). We acknowledge that these incidents highlight areas where our health and safety operations can be further improved, and we are committed to doing better for the safety of our workers. We have since taken remedial actions to identify root causes to prevent future occurrences.

The comparatively stronger HSE performance this year was largely due to our efforts in adopting a more structured PCG-wide approach towards addressing the root causes of previous incidents during turnarounds, where past learnings were discussed and shared with all PCG operating units. The success of this initiative will see us extending it to cover scheduled maintenance as well.

With regards to our plant reliability, PCG encountered both internal reliability challenges, coupled with several feedstock and utility supply disruptions in 2023, which ultimately affected our plant utilisation rate. We have since undertaken a series of corrective and mitigating actions throughout the year. To that end, we have conducted a deep dive, focusing on our people, our processes and even our culture to come up with a long-term plan to prevent future occurrences.

In achieving Commercial Excellence, we fostered collaboration and close partnerships with all stakeholders to optimise value creation and meet our customers’ needs. Despite significant turnaround activities, customer orders were consistently fulfilled throughout the review period. PCG recorded sales volume of 9.6 million tonnes in 2023, comparable to the previous year. While margins were compressed by lower prices, we were prudent in managing our costs, especially our cost to serve, validating our resilience and ability to realise value year on year.

Our commitment to satisfying customer needs extended to the introduction of new and improved products and solutions. In 2023, we launched Ethonas SF401, a more cost-effective spacer fluid designed for oil and gas applications. Concurrently, we continued to extract value from existing enhanced products and solutions.

We also undertook a significant digital initiative with the phased rollout of the PETRONAS360 Customer Portal (P360). P360 provides customers with access to transaction details, account statements, real-time delivery status and various exciting features. These features include online spot volume offers, getting more information on products, and the ability to log enquiries and feedback directly to PCG. Pilot customers started using this platform in November 2023 and we plan to expand it to other active customers by 3Q 2024 as part of our ongoing commitment to enhance customer experience.

In future-proofing the business against market volatility, our Growth Delivery Excellence focuses on extending our value chain, building our specialty platform and creating optionality for growth through innovation and new technologies. We also continue to make meaningful progress in creating circular and sustainable products that have the potential to assist our customers in their respective decarbonisation journeys.

In 2023, our new specialty ethoxylates and polyether polyols plant in Kertih, Terengganu, and nitrile butadiene latex plant in Pengerang, Johor, both achieved the ready for start-up phase. The plant in Kertih will enable us to meet the growing demand for foam products in the automotive sector, cleaning and personal care products. The plant in Pengerang is also well-positioned to capture opportunities in the global glove market, given Malaysia’s status as the largest glove producer in the world.

In addition, we reached a Final Investment Decision (FID) in the acquisition of a Maleic Anhydride (MAn) plant in Gebeng, Pahang, from BASF PETRONAS Chemicals Sdn. Bhd. and to upgrade the facilities to produce refined MAn. Refined MAn is typically applied in the production of food and beverage, coating and surfactants, pharmaceuticals, textiles and other industrial products. This acquisition will enable us to better serve customers from the Asia Pacific region and the Indian subcontinents and strengthen our portfolio as we explore opportunities in Europe and the Middle East, in addition to fostering synergies with the Specialty Chemicals business.

We have achieved significant advancements in the post-merger integration with Perstorp Group (Perstorp) for our specialties platform, securing alignment on the value synergies and establishing plans for their execution in the next phases. This year, BRB Group (BRB) introduced new products for both the cosmetics and automotive industry, and BRB Malaysia Sdn. Bhd. obtained certifications such as ISO 9001, ISO 22000 and Good Hygiene Practices. These certifications demonstrate the facility’s efficient operating management system and compliance to safety practices in handling food-grade products.

In creating optionality for growth, our technology development of bio-Monoethylene Glycol (Bio-MEG) is ongoing with active customer collaboration in refining the products to meet their various specifications. We have constructed a pilot plant to produce bio-based emollients to diversify PCG’s bio-based offerings in the personal care sector. This pilot plant will be part of the Innovation Hub that PCG is currently developing in Bangi, Selangor.

Through this Malaysian Innovation Hub, along with BRB and Perstorp’s innovation labs, we will establish a global innovation network that aims to increase the level of innovation sophistication in our key focus markets and enable localised solutions. Investing in innovation and technology ecosystems is vital for PCG to propel our growth in specialty chemicals and drive competitiveness.