Petronas lowers dividend payout for 2013

Petronas lowers dividend payout for 2013
Business & Markets 2013
Written by Fatin Rasyiqah Mustaza & Shalini Kumar of theedgemalaysia.com
Tuesday, 27 August 2013 10:14

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will declare a lower dividend of RM27 billion this year, down from last year’s RM30 billion, although the national oil firm is expected to generate higher profit, said president Tan Sri Shamsul Azhar Abbas.

Shamsul said Petronas is looking at a profit before tax (PBT) projection of RM91 billion or more by the end of the year.

Shamsul earlier announced that Petronas wanted to adopt a 30% dividend payout ratio, meaning the amount declared would fluctuate according to earnings. However, in the past few years, Petronas has consistently paid out dividend of RM30 billion regardless of its profit level.

According to executive vice-president finance Datuk George Ratilal, Petronas board has yet to approve a 30% dividend policy. It would be a long discussion, he told the media yesterday when announcing the national oil firm’s second quarter (2Q) results.

Petronas posted a net profit of RM15.3 billion for its 2Q ended June 30, a slight decline from RM15.4 billion a year ago. Revenue came in at RM74.4 billion against RM70.7 billion a year ago.

For the six months ended June 30, Petronas also saw a slight decline in net profit to RM35.6 billion compared with RM36.3 billion a year ago. Revenue stood slightly higher at RM151 billion against RM146 billion in 2012 financial year (FY12).

Revenue growth was driven by higher crude oil and gas trading volume as well as higher petroleum product sales volume on the back of stronger customer demand.

As at June 30, Petronas had total assets of RM514.4 billion, a 5.2% increase from December last year of RM489.2 billion

Shamsul said the flat earnings were due to narrower margins caused by higher operating expenses and a lower gain on the disposal of investments and property and plant equipment.

Tapis price dropped to US$109.22 (RM360.4) per barrel during 2Q from US$116.79 a year ago. The price in 2QFY13 was also lower compared with US$118.42 in the preceding quarter.

Taking into account the geopolitical tension in the Middle East and the increase in production in Libya, Shamsul expects crude oil prices to hover around US$100 to US$110. This would match the profit before tax projection, he said.

“We can expect Brent to gain somewhat higher ground in the coming weeks due to the continued geopolitical sentiment, especially in Egypt and Syria. Nevertheless, we expect Brent oil to trend lower for the rest of the year,” said Shamsul.

“We have made good operational progress for the first six months of the year,” said Shamsul, adding that production was up by 7% and international production went up by 9%, which was mainly contributed by its operations in Canada and Iraq.

On Progress Energy Resources Corp, Shamsul said Petronas is still in talks with a group of potential buyers for a stake in the company that owns massive liquefied natural gas reserve in Canada.

Petronas disposed of a 10% stake in Progress Energy in March.



This article first appeared in The Edge Financial Daily, on August 27, 2013.