Shell posts net loss for third consecutive year

by **Cals** Thu 10 Jul 2014, 02:21

Business & Markets 2014

Written by Levina Lim of theedgemalaysia.com

Wednesday, 09 July 2014 09:47

KUALA LUMPUR: Shell Refining Company (Federation of Malaya) Bhd said yesterday it recorded a net loss of RM44.08 million for the first quarter of financial year 2014 (1QFY14), as refining margins remain under pressure.

Its net loss for the 1Q ended March 31, 2014, narrowed by 8.3% to RM44.08 million from a net loss of RM48.05 million in the previous corresponding quarter.

“The continuing weak global refining margin is of great concern. The board is exploring various responses to the challenge,” said Shell in a filing with Bursa Malaysia.

Revenue from the sale of oil products, however, was 10.5% higher at RM3.99 billion from RM3.61 billion in 1QFY13 due to higher volumes sold in 2014.

Shell has been posting losses since FY11, with cumulative losses totalling RM277 million. In the company’s annual general meeting (AGM) last Monday, it said that its outlook remains “challenging”.

“We do not provide guidance as to whether we will return to the black this year. All I can say is that the operating environment has been challenging, and we have put in place a strategic turnaround plan,” chairman Iain John Lo had told the press during the AGM.

The company said its refinery processed 9.5 million barrels of crude oil in 1QFY14, 2% higher compared to the previous corresponding quarter, with 10.3 million barrels of product sold.

The oil and gas company buys 67% of its crude from the Far East and Africa, with the remaining 33% from Malaysia.

It added that the 1QFY14’s net loss against 4QFY13’s RM36 million was largely attributable to higher financing costs, by RM11.6 million, in 1QFY14.

Its loss per share went down to 14.69 sen, from a loss per share of 16.02 sen in the previous corresponding quarter.

Shell’s share price hit a five-year low of RM5.73 last Friday, and had been on a steep downtrend since August 23 last year, falling 30.1% to RM5.80 yesterday.

No dividend was declared last year while its gross dividend payout decreased to 20 sen per share in 2012, from 50 sen per share in 2009.

Management said future dividends will only be considered after taking into account operational requirements such as future capital expenditures, targeted gearing levels, and the external margin environment to keep the group financially feasible.

This article first appeared in The Edge Financial Daily, on July 9, 2014.