Petronas 1Q profit up 9% at RM14b

by MARK RAO/TMR PIC

Petroliam Nasional Bhd (Petronas) posts a 9.4% year-on-year (YoY) increase in profit for its first quarter as a stronger revenue base offset higher production costs.

For the quarter ended March 31 this year (1Q19), the national energy company’s profit after tax came in at RM14.25 billion – 9.4% higher than the RM13.02 billion managed in the corresponding quarter last year.

This was attributable to the higher turnover brought in at RM61.99 billion, up 7% YoY, owing to the higher sales volume achieved for petroleum products and liquefied natural gas (LNG) and weaker ringgit-to-US dollar exchange.

Lower average realised prices, mainly for petroleum products, crude oil and condensates, partially mitigated the increase.

The company did, however, recognise higher net product and production costs. Group costs rose 5% YoY to RM49 billion in 1Q19 in line with the higher sales volume achieved.

Lower net write-back on asset impairments and higher contributions made to the National Trust Fund also partially weighed on earnings for the quarter.

Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin (pic) said the improved 1Q19 showing attests to the strength of the company’s three-pronged strategy which includes expanding on core businesses and diversifying into new markets.

“Looking ahead, while facing market uncertainties, we will continue to invest for the future and have recently expanded our upstream portfolio through our equity acquisition of the Tartaruga Verde field in Brazil,” he said in a statement today.

“Our strategic intent to venture beyond oil and gas has also made significant progress with our recent investments in renewables and specialty chemicals.”

The upstream business remained the group’s largest contributor at 50% of total revenue brought in for 1Q19, bolstered by the weaker ringgit and higher LNG sales achieved.

Downstream revenue, which comprises 44% of total group turnover, also came in higher due to the increase in sales for petroleum products.

Entitlement for crude oil, condensate and natural gas for the group was higher at 1.82 million barrels of oil equivalent per day while capital expenditure (capex) came in at RM8.3 billion in 1Q19.

Capex for the quarter was down from the RM12 billion spent in 1Q18 but is expected to pick up in the coming quarters.