Petronas reports 124% profit surge in 1Q17

By P Prem Kumar

Petroliam Nasional Bhd (Petronas) will remain conservative throughout 2017, despite recording 124% surge in net profit for the first-quarter of 2017 (1Q17) due to improved prices and lower impairment cost.

The national energy firm registered RM10.3 billion profit for 1Q17 against RM4.6 billion recorded in the corresponding quarter last year.

Revenue also grew by 25% to RM61.6 billion from RM49.1 billion in the same quarter of 2016.

In a statement last Friday, Petronas said the increase in profit was mainly due to higher oil prices and improved margins from the upstream and downstream businesses, in tandem with ongoing internal transformation efforts that have resulted in heightened cost optimisation and efficiency improvements across the group’s value chain.

Revenue growth was due to higher average realised prices recorded across all products, exchange rate impact and higher processed gas sales volume. This, however, was partially offset by lower crude oil and condensate and petroleum product sales volume.

Petronas said it continued to maintain a conservative outlook for the remainder of 2017 despite the positive results, as supply and demand balances are still slow to return to a sustained equilibrium.

“Petronas will focus on its group-wide efforts to optimise costs, further improve efficiency and operational excellence through strategic collaborations within the industry,” it said.

President and group CEO Datuk Wan Zulkiflee Wan Ariffin said the strong performance in 1Q17 was largely driven by the company’s trans- formation initiatives which continued to gain traction.

“This has strengthened internal collaborations across our upstream and downstream businesses, resulting in improved plant utilisation rates, production and the overall creation of substantial value.

“We will continue to focus on driving our upstream and down- stream businesses to maximise returns in unlocking value as a fully integrated oil and gas company,” he said.

The group’s cashflows from operations also grew by 86% to RM18 billion compared to the corresponding quarter last year, as a result of higher average realised prices.

Meanwhile, internal efforts to reduce cost and improve efficiency continued to allow Petronas to reduce controllable operating expenditure from RM11.4 billion to RM11.1 billion.

Total assets decreased to RM602.1 billion as at March 31, 2017, from RM603.3 billion recorded on Dec 31, 2016, as a result of a stronger ringgit against the US dollar.

Shareholders’ equity, meanwhile, increased to RM386.9 billion in 1Q17 from RM380.3 billion at the end of last year, contributed by profit generated during the period.

Gearing ratio decreased to 17.1% in 1Q17 compared to 17.4% at end-2016, primarily impacted by higher equity following profit generated during the period.

Capital investments in 1Q17 totalled RM11.9 billion, mainly attributable to the Refinery and Petrochemical Integrated Development project in Johor.