RISING OPTIMISM
Higher oil prices, economic growth will boost company earnings, say analysts
PETROLIAM Nasional Bhd is poised for higher full-year earnings due to improvement in oil prices and strong quarterly gross domestic product growth, say analysts. The group’s net profit and revenue surged to RM10 billion and RM53.7 billion, respectively, in the third quarter of this year.
HIGHER oil prices and the improving economy will push up Petroliam Nasional Bhd’s (Petronas) earnings this year, said analysts.
Petronas posted a strong performance in the third quarter ended September 30.
Net profit surged 64 per cent to RM10 billion from RM6.1 billion a year ago.
Revenue for the quarter was RM53.7 billion, up 14 per cent from a year ago, driven by higher average realised prices for major products and impact of foreign exchange rate, said Petronas in a statement.
Group net profit for nine months more than doubled to RM27.3 billion from RM12.5 billion previously, while revenue edged up 15 per cent to RM161.8 billion.
Analysts said crude oil prices had been on an upward trend, hitting US$63 (RM259) per barrel currently from a low of US$46 per barrel in June.
The economy is also strengthening, with the gross domestic product growing faster at 6.2 per cent in the third quarter from 5.8 per cent in the preceding quarter.
MIDF Research oil and gas analyst Aaron Tan said oil prices are expected to remain solid.
“We expect stable crude oil prices, which would come from the Organisation of the Petroleum Exporting Countries’ decision to continue to suppressing oil production,” he told NST Business.
Petronas said the stronger results are due to improved performances of its upstream and downstream businesses and supported by recovering commodity prices, higher margins as well as its transformation initiatives.
The stronger profit is partially offset by higher tax expenses, product costs and amortisation of oil and gas assets, it added.
President and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said in light of the modest recovery in oil prices and continued drive for efficiency improvement, Petronas’ overall year-end performance should be better.
He said the group remains committed to improving efficiency across its operations, and will continue to focus on transformation initiatives which have produced tangible results.
“We intend to enhance our efforts to take advantage of the current recovery in oil prices for Petronas to close the year strongly,” he said.
Petronas said its earnings before interest, tax, depreciation and amortisation grew to RM21.5 billion from RM15.2 billion.
It said capital investments for the quarter was RM12.5 billion, mainly attributable to the Refinery and Petrochemical Integrated Development project in Johor.
Its total assets eased to RM600.3 billion as at September 30, from RM603.4 billion as at December 31 last year, due to the stronger ringgit against dollar.