Petronas Dagangan’s earnings marred by low sales volume, MOPS price
KUCHING: Petronas Dagangan Bhd’s (PetDag) 1QFY20 loss after tax in the first quarter of its financial year 2020 (1QFY20) came in at RM29.4 million which was below consensus’ full-year earnings estimates.
Comparing against the year before, revenue was down by 7.5 per cent year on year (y-o-y) whilst its bottomline dipped by 110.2 per cent y-o-y.
The loss was mainly attributable to lower overall sales volume and lower overall average selling price during the quarter due to the sharp decline in Means of Platts Singapore ( MOPS) price, which it uses as a pricing basis for its refined products.
“On a quarterly sequential basis, revenue declined by 15.9 per cent quarter on quarter (qo-q) whilst earnings dipped by 123.3 per cent q-o-q respectively which was attributable to lower average selling prices and lower sales volume by during the quarter,” outlined MIDF Amanah Investment Bank Bhd ( MIDF Research) yesterday.
“Segment revenue was recorded lower by 6.5 per cent y-o-y or RM234.5 million as a result of lower sales volume and lower average selling prices in the period.
“The lower sales volume and average selling prices during the quarter was mainly attributable to the implementation of movement control order (MCO) by the government and the sharp decline in MOPS prices due to the oil price war which has caused the crude oil price and WTI price to decline to an unprecedented level in the past 10 years.”
The segment reported a loss during the quarter due to lower gross profit for Mogas and Diesel as well as higher opex incurred on software maintenance.
Meanwhile, PetDag’s commercial segment revenue declined by 8.6 per cent y-o-y or RM297 million during the quarter.
MIDF Research said this was mainly due to the decline in average selling prices by five per cent y-o-y during the quarter coupled with the decline in sales volume by four per cent y-o-y.
“The decline in volume was mainly due to the implementation of MCO towards the end of the quarter which saw travel bans imposed for both domestic and international air travels as well as closure of industrial businesses to curb the spread of the Covid-19 pandemic,” it said.
“Similarly, the segment also reported a loss due to the writedown of inventory to net realisable value following the sharp decline in MOPS price during the quarter due to the fall in crude oil price.”
These led the research house to reduce its FY20 and FY21F earnings estimates for PetDag by 40.1 and 10.7 per cent respectively to RM542.7 million and RM852.4 million as MIDF Research expect average selling prices to remain less favourable to PetDag in FY20 given the global geo-political and the Covid19 pandemic developments that continues to affect MOPS price.
“Additionally, we have also taken into account the potential continued contraction in sales volume in 2QFY20 given that the MCO was fully in-force in April 2020 and following that, the conditional movement control orderin May and June 2020,” it added.