Petronas third quarter pre-tax profit jumps to RM8bil
PETALING JAYA: Petroliam Nasional Bhd (Petronas) has more than doubled its profit before tax to RM8bil for the third quarter ended Sept 30, 2016 compared to a year ago on cost savings, lower impairment charges on its assets and a favourable currency exchange rate.
“The current oil price environment continues to pose significant challenges to the industry and the outlook remains uncertain,” the national oil company said in a statement yesterday.
Revenue declined 18.9% to RM48.7bil from a year ago.
It said this was due to the lower average realised prices recorded across all products in line with the downward trend of key benchmark prices, coupled with the impact of a lower sales volume for petroleum products and crude oil and condensates.
Profit after tax for the quarter was RM6.1bil, a more than four-fold jump from a year ago,
In its financial report, the group said capital investments for the quarter totalled RM10.8bil, mainly attributable to the Refinery and Petrochemicals Integrated Development project in Johor, domestic upstream capital expenditures and the Sabah Ammonia Urea (Samur) project.
Cash flows from the group’s operating activities during the quarter declined 37% from a year ago in line with the lower revenue.
Quarter-on-quarter, the group’s profit before tax recorded a two-fold or 145% jump from RM3.3bil previously, while revenue increased marginally by 0.6%.
In the statement, the group said its improved earnings from the preceding quarter was due to its group-wide efforts to reduce cost, improve efficiency in cash management and sustain world-class operational efficiencies, as well as lower net impairment on assets and well costs.
For the first nine months of the year, the group’s revenue was down 22% to RM146.3bil, while profit before tax was down 49% to RM18bil.
This was mainly due to the downward trend of key benchmark prices, higher net impairment on assets and well costs, as well as lower sales volume of petroleum products, crude oil and condensates, and processed gas.
Capital investments totalled RM35.9bil for the period, mainly attributed to the same projects.
In its upstream segment, the group’s total production volume for the year was 2.3 million barrels of oil equivalent (boe) per day, a slight increase from the previous year.
“This was mainly due to the resumption of operations of the Sabah-Sarawak Gas Pipeline, higher facilities uptime in Malaysia and Canada, as well as higher production from Indonesia and Australia, partially offset by the natural decline rate,” it said.
Total liquefied natural gas (LNG) sales volume was slightly lower year-on-year (y-o-y), mainly due to a lower trading volume, partially offset by volumes from Gladstone LNG.
Despite the challenging industry outlook, Petronas said Malaysia continued to attract upstream investments.
In the downstream segment, the group said the low prices across all products, along with the lower sales volume of crude and petroleum products, had impacted the cumulative revenue recorded by Petronas’ downstream activities for the year-to-date.
The sales volume for petroleum products fell by 11.0 million barrels to 203.3 million barrels, due to the overall reduction in marketing and trading activities.
Crude oil sales volume was 146.1 million barrels, also lower than a year ago, due to lower trading activities, partially offset by more marketing activities.
Sales of petrochemical products, however, rose by 15% or 0.7 million tonnes to 5.5 million tonnes y-o-y, due to improved plant performance, leading to higher production. “Downstream growth projects are on track. “The Pengerang Integrated Complex is 48% in progress, while Samur has successfully produced on-specification urea and is progressively ramping up the plant for full commercial operations in the fourth quarter of 2016,” it said.
The group said shareholders’ equity was at RM361.7bil as at Sept 30, 2016, lower by RM13.2bil compared to Dec 31, 2015.
The group said this was due to the approved RM16bil dividend to the Government for the financial year ended Dec 31, 2015 and the impact of the weakening US dollar exchange rate against the ringgit.
“While performance in 2016 is affected, Petronas has been responsive with strong operational efficiency and financial discipline,” the group said in the statement.