PetGas, PetDag’s 1Q earnings surge, but pandemic remains key risk


PETRONAS Gas Bhd’s (PetGas) earnings rose 40.28% year-on-year (YoY) to RM516.4 million for its first quarter ended March 31, 2021 (1Q21), on lower operating cost and favourable foreign exchange movements.

The gas infrastructure and utilities company’s revenue slipped from RM1.39 billion in 1Q20 to RM1.34 billion in 1Q21 due to lower income from its utilities segment, in line with lower product prices, its stock exchange filing on Tuesday noted.

PetGas declared a dividend of 16 sen per share, payable on June 12.

The group’s gas processing plants maintained their world-class operational performance, recording close to 100% reliability.

Segment revenue was comparable at RM428.9 million while segment results rose by 9.2% or RM20.4 million on the back of lower operating costs.

In the gas transportation segment, PetGas’ pipeline network achieved 100% reliability, similar to the corresponding quarter.

Segment revenue was slightly lower by 1.5% or RM4.5 million, mainly due to the lower number of operating days compared to the corresponding quarter, coupled with lower operations and maintenance services revenue.

In the regasification segment, liquefied natural gas (LNG) regasification terminals in Sungai Udang (RGTSU), Melaka and Pengerang (RGTP), Johor, sustained their strong reliability performance at close to 100% during the quarter.

Segment revenue grew by 0.8% or RM2.6 million following the introduction of new revenue streams from LNG reloading at RGTSU and truck loading at RGTP.

PetGas’ utilities plant achieved 100% product delivery reliability for steam, electricity and industrial gases during the quarter under review.

Segment revenue fell by 16% or RM52.6 million, mainly attributable to lower product prices following a downward revision of fuel gas price as a result of changes in pricing from regulated price to reference market price amid higher sales volumes.

“Performance in 2021 is expected to remain resilient despite the ongoing pandemic as the group’s business model and long-term contracts ensure steady revenue streams, particularly for gas processing, gas transportation and regasification business segments,” the group stated in its filing.

Meanwhile, Petronas Dagangan Bhd (PetDag) posted RM191 million net profit for the 1Q21 against a net loss of RM29.42 million it suffered for the same period a year ago, driven by higher gross profit attributed to improved pricing power based on the Means of Platts Singapore (MOPS) price benchmark — a pricing basis for many refined products in South-East Asia.

Lower operating expenditure from lower advertising and promotion activities and purchased and professional service also contributed to the rebound, the group noted in its Bursa Malaysia filing on Tuesday.

Revenue for the quarter slipped 22.1% YoY to RM5.1 billion, corresponding to lower volume impacted by the prolonged pandemic crisis and the re-implementation of Movement Control Order (MCO).

“The ongoing Covid-19 pandemic continues to pose challenges to our operations. Nevertheless, we see improvement quarter-on-quarter, but we are cautious of the outlook, especially with MCO now being re-implemented nationwide,” PetDag MD and CEO Azrul Osman Rani said in a statement on Tuesday.

PetDag’s retail segment’s revenue decreased by RM335.4 million, mainly due to a lower sales volume of 9% and a decrease in average selling prices by 1% in tandem with lower demand.

The group’s retail segment pretax profit was RM180.1 million compared to a loss before tax of RM86.1 million, helped by the higher gross profit from gas and diesel, contributed by favourable MOPS prices despite lower sales volume from the MCO re-implementation.

The commercial segment’s revenue decreased 35% YoY to RM1.1 billion due to decreased average selling prices by 2% and lower sales volume, predominantly for Jet A1 due to the continuing travel restrictions.

PetDag has declared an interim dividend of 14 sen per ordinary share amounting to RM139.1 million for 1Q21, payable on June 24.

The group stated the ongoing pandemic remains a key risk to its outlook for 2021, given the resurgence of Covid-19 cases and the MCO re-implementation.

“The Dated Brent upward momentum in early 2021 supported by the additional voluntary production cut by OPEC+ and the rollout of vaccine for Covid-19 offer a positive outlook for the business,” the group said.

Moving forward, PetDag shall continue to future-proof the business by investing strategically and prioritising key growth areas.

Its retail business would accelerate its non-fuel business by expanding [email protected] and bringing quality and affordable essential products directly to customers.

The liquefied petroleum gas (LPG) business would strengthen its distribution channels through [email protected] and [email protected] Shop whilst lubricant business will focus on delivering differentiated customer experience through its network of Petronas AutoExpert workshops.

PetDag added its commercial business would continue to provide a comprehensive product offering to retain and capture new markets.