Petronas profit plunges 85% on low global oil prices
MALAYSIA’S state energy firm Petronas said profits plunged 85 percent in the second quarter due to low oil prices, adding to concerns about the country’s slowing economy.
Petronas, Malaysia’s only Fortune 500 company and the largest source of government revenue and national export earnings, reported a net profit of 1.62 billion ringgit (US$402 million) for the second quarter, down from 11.07 billion ringgit over the same period last year.
Revenue was 48.44 billion ringgit, 21pc lower than the same period in 2015. The firm said it expects to be impacted by “volatility in oil prices” for the rest of the year.
“Despite a modest recovery in crude oil prices, uncertainties remain due to persistent oversupply and sluggish demand outlook,” it said in a statement.
Energy-exporting Malaysia has the third-largest economy in Southeast Asia, but has been grappling with falling oil prices and weak overseas demand for the commodity – denting revenues and putting severe pressure on the economy and local currency.
The country has also been rocked by a massive financial scandal amid allegations that billions of dollars were stolen from a state investment fund founded and overseen by the prime minister.
Figures earlier this month showed the economy grew 4pc yearon-year in the April to June period – its slowest rate of expansion since a 1.1pc contraction in the third quarter of 2009 during the global financial crisis then.
In July, Malaysia unexpectedly cut interest rates for the first time in seven years.
Oil prices entered a “bear” market at the start of the month on oversupply concerns, falling more than 20pc and closing below $40 a barrel for the first time since April.
The commodity rebounded last week on hopes producers might decide to freeze output at a meeting next month, but analysts have voiced doubts that a deal will be reached.
The Petronas Twin Towers in Kuala Lumpur. The Malaysian company is experiencing a rough patch as oil prices tumble, leading profits to plunge 85 percent in the second quarter.