S&P downgrades PTT Global Chemical outlook to negative, earnings under pressure

Investing.com – S&P Global Ratings has downgraded the outlook for PTT Global Chemical (PTT GC) from Stable to Negative, while affirming the company’s credit rating at “BBB-”.

The rating agency noted that the prolonged downturn in the petrochemical industry will delay the company’s credit metric recovery. S&P expects GC’s profitability to show meaningful improvement no earlier than 2027, with leverage potentially remaining high at 6.5x to 7.5x during that period.

GC’s full-year 2025 performance significantly underperformed S&P’s expectations, with adjusted debt-to-EBITDA ratio around 9 times. Weak earnings stem from narrowing product spreads and reduced sales volumes due to planned maintenance at refineries and aromatics plants. The ongoing restructuring of subsidiary Vencorex also resulted in an operational loss of nearly 2 billion Thai Baht.

S&P has lowered its assessment of GC’s business risk, indicating that structural overcapacity will continue to impair profitability over the next two to three years. The commissioning of larger-scale, low-cost petrochemical capacities in China and the Middle East has weakened GC’s competitiveness in bulk chemicals.

Over the past four to five years, GC’s EBITDA margins have remained weak at approximately 3%-5%, below those of global peers with similar business risk profiles.

S&P forecasts GC’s 2026 EBITDA at about 26 billion Thai Baht, 25% lower than previous estimates. This forecast incorporates expectations of increased sales of petrochemical products and refined fuels over the next 12 months, supported by the cheaper Gulf natural gas feedstock introduced in Thailand starting January 2026.

The company will increasingly rely on its 30 billion Thai Baht asset monetization plan to reduce debt, as S&P expects limited free operating cash flow under current market conditions. Of this amount, GC expects to complete 9 billion Baht in the first quarter of 2026, with the remaining 20 billion Baht to be achieved through multiple transactions.

Parent company PTT’s ongoing financial support will underpin GC’s credit profile. S&P estimates GC can draw an additional 20-25 billion Baht from its deferred trade credit arrangements with PTT, helping to meet refinancing needs at least until 2027.

The negative outlook reflects S&P’s view that ongoing industry weakness introduces uncertainty into the company’s deleveraging trajectory over the next 12-24 months. This increases pressure on GC to maintain its leverage target of 5x and to execute its asset monetization initiatives.

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