PetGas’ 3Q earnings slide 1.2% on lower gross income

By NG MIN SHEN

PETRONAS Gas Bhd’s (Pet-Gas) net profit slid 1.2% to RM417.43 million in the third quarter (3Q) ended Sept 30, 2017, from RM422.71 million recorded in the previous year’s corresponding period, due to lower gross earnings.

The company said the lower earnings are also attributable to higher depreciation, following the completion of capital projects and higher utilities cost of sales, arising from upward fuel gas price revisions effective Jan 1, 2017, and July 1, 2017.

Revenue for the quarter was flat at RM1.16 billion compared to RM1.158 billion registered a year ago.

PetGas said the higher revenue contributed by the utilities and regasification segments was offset by lower gas processing and gas transportation revenue.

The group has proposed a third interim dividend of 16 sen per share, to be paid on Dec 8, 2017.

On a segmented basis, its gas processing liquid plant extraction sustained a performance above target, contributing towards continued performance-based structure income, though at lower tranches, compared to the corresponding quarter.

That had caused the revenue dropping by RM3.1 million, or 0.8%, and contribution to group earnings also dropped RM2.3 million, or 1.5%.

The gas transportation segment registered a revenue of RM330.1 million for the quarter on sustained pipeline network reliability at close to 100%.

The segment’s contribution to the group stood at RM256.7 million, lower by RM1.8 million, or 0.7%, due to higher repair and maintenance costs.

For utilities, selling price rose in line with upward fuel gas price revisions effective Jan 1 and July 1, 2017, leading to revenue climbing by RM4.6 million, or 1.7%, to RM277.6 million.

However, steam and industrial gases production volume was lower as demand from customers fell due to a turnaround exercise.

Cost of sales also increased along with upward fuel gas revision and higher depreciation following completion of several capital projects, resulting in lower contribution to the group at RM27.1 million.

The group’s regasification segment saw larger turnover by RM4.2 million, or 2.6%, at RM167 million, following higher storage fees income, helped by a stronger US dollar against the ringgit.

However, its contribution to the group was RM2.7 million, or 3.5%, lower at RM73.6 million, caused by higher floating storage unit lease and rental, plus higher depreciation on completion of several capital projects.

Going forward, the unit of Petroliam Nasional Bhd (Petronas) expects its performance to remain stable, supported by sustainable income streams from existing gas processing, gas transportation and regasification service agreements signed with Petronas.

Effective Jan 16, 2018, the gas transportation and regasification segments activities shall comply with the new requirements of the Gas Supply (Amendment) Act 2016; certain details of which are yet to be issued by the Energy Commission.

The group anticipates its utilities segment to continue contributing positively to overall results.

The company’s new liquefied natural gas regasification terminal in Pengerang, Johor, with a total capacity of 490 million standard cuft per day, achieved commercial operation on Nov 1, 2017, and will also contribute to the group’s revenue stream.