Strategic Business Operations In the aftermath of the COVID-19 pandemic, the global economy was recovering from its lowest point when uncertainty re-emerged due to a number of factors. Among them, two key factors – negative impacts from the current international economic outlook and the climate crisis – posed major challenges to the company’s business operations. IRPC’s DUAL CHALLENGES IMPACT FROM NEGATIVE ECONOMIC OUTLOOK DISRUPTION FROM CLIMATE CHANGE 1 Economic Hurdles Sluggish demand and low petrochemical margin result in negative financial performance. 2 Business Growth Negative macroeconomic outlook decelerates cash generation and investments in pipeline. 3 Credit Rating Lower EBITDA has negatively affected credit rating, and may result in higher financing cost. 1 Decarbonization and Net Zero Environmental regulations require additional efforts to reduce GHG emission and achieve net zero. 2 Circular Economy The EU’s deal promotes circular economy, inducing market requirement for green and recycled products. 3 Energy Transition Accelerated growth in renewable energy sources reduces demand for fossil fuels. 1. Negative impact from the international economic outlook - global inflation has led central banks to respond by raising interest rates to curb inflation. This resulted in widespread economic slowdown due to decreased global demand. Investment in new projects came with a higher cost of finance but a lower project rate of return. This factor would likely affect the company’s credit rating. 2. The climate crisis – adverse effects of climate change are becoming increasingly more severe. Countries around the world began enacting stricter environmental policies, setting out to achieve more ambitious goals, such as Net Zero greenhouse gas emissions, developing a circular economy, promoting green and recycled products. A shift away from fossil fuels toward clean energy sources seemed irreversible. 88 Structure and Business Operations of IRPC IRPC Public Company Limited
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