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IRPC Drives Innovation for Sustainable Growth
IRPC forecasts a surge in oil demand during the winter season. The forecast aligns with the petrochemical group’s preparation for production and distribution of products during the year-end festival season due to increasing demand expectations. IRPC aims to drive the organisation with innovation and create business intelligence with the Save Overcome Strive (SOS) strategy, while keeping track of the impacts affecting the company to provide solutions to cope with global economic volatility.
IRPC Public Co., Ltd. (IRPC), led by Terdkiat Prommool, President and CEO, revealed the trend of the crude oil market in Q4 2024, predicting that overall oil demand will increase due to the need for diesel and fuel oil for energy production during winter. Meanwhile, the demand for petrochemical products is expected to improve in preparation for the year-end festival. In addition, China’s economic stimulus measures, focusing on building domestic purchasing power, alleviating deflation, and stimulating the real estate sector, have resulted in positive signs for the recovery of the industry.
However, in Q3/2024, crude oil price volatility and uncertainty in the world market, coupled with uncontrollable risk factors from the economic slowdown in China, the United States, and Europe, led to a decline in crude oil prices, which affected the company’s performance in Q3/2024. Compared to Q2/2024, IRPC had a net loss of 4.88 billion baht, an increase in losses of 4.15 billion baht, with net sales revenue of 69.96 billion baht, a decrease of 4.10 billion baht or 6%, mainly due to a 10% decrease in average selling prices, in line with the decrease in crude oil prices, despite a 4% increase in sales volume.
On the petroleum business front, the company’s gross profit from refining products at market prices (Market GRM) increased due to higher spreads for base lubricant products compared to the fuel oil price, particularly the spread of asphalt prices which adjusted upwards and domestic demand increased in line with the annual budget. In addition, the petrochemical business saw a gross profit at market prices (Market PTF) increase from the spread of styrenics products and raw materials, which adjusted upwards due to economic stimulus measures in China. This resulted in the company’s gross profit from production at market prices (Market GIM) of 3.65 billion baht, or 5.72 USD per barrel, a 5% increase from the previous quarter.
Due to concerns regarding economic slowdowns in China, the United States, and Europe, crude oil prices fell, causing the company a loss of 3.37 billion baht, or 5.27 USD per barrel in oil stocks, and a reduction in inventory value to net realisable value (NRV) by 1.63 billion baht, or 2.56 USD per barrel. Therefore, the company lost 5 billion baht, or 7.83 USD per barrel in net oil stocks, resulting in EBITDA in Q3/2024 of -4.84 billion baht, compared to EBITDA of 1.44 billion baht in the previous quarter. However, the strong baht caused the company to gain 763 million baht from financial derivatives, 182 million baht from exchange rates on loans, and 575 million baht in oil risk management (not yet realised), but incurred 2.33 billion baht in depreciation and 687 million baht in net finance costs, resulting in a net loss of 4.88 billion baht, an increase of 4.15 billion baht from the previous quarter.
Prommool continued, “The company has implemented the SOS (Save Overcome Strive) project to reduce production costs and increase work efficiency through investment and asset management, while closely and continuously monitoring the fluctuations of external factors that affect the company’s performance in order to promptly adjust various measures to cope.”
IRPC is committed to developing and elevating human rights operations, which is part of the goal of driving sustainable business by linking social management with an interest rate risk hedging contract (Social-Linked THOR) with Kasikornbank Public Company Limited to effectively manage financial risks, along with promoting clear and measurable ESG initiatives. In addition, IRPC collaborated with the Innovation One Fund of the Federation of Thai Industries (FTI) to support SMEs and startups, developing “REINFOXX White Bear Fertilizer” to enhance sustainability in the agricultural sector.
With this commitment, IRPC has received innovation awards such as Best Innovative Company from SET Awards 2024 and four other National Innovation Awards, including: 1. Outstanding Innovative Organisation Award in the Large Enterprise category, awarded to IRPC for applying knowledge, technology, and creativity to create value and sustainable growth at strategic, process, and organisational structure levels. 2. National Innovation Honour Award for the ABS Plastic Pellets from Natural Rubber project, reaffirming IRPC’s role as an innovation award recipient for over 10 years. 3. Second Runner-up in the Social and Environmental category for the PP Phthalate Free Products project, an innovation benefiting society and the environment, with outstanding product design and processes. 4. Second Runner-up in the Economic category for the UHMWPE for Battery Separator project, demonstrating the potential to create commercial value and sustainable economic benefits for the country.
