PetGas' 4Q profit falls 27.4% on lower JV profit, higher costs

by **Cals** Thu 25 Feb 2016, 01:41

PetGas' 4Q profit falls 27.4% on lower JV profit, higher costs

By Kamarul Anwar / theedgemarkets.com | February 24, 2016 : 8:49 PM MYT

KUALA LUMPUR (Feb 24): Petronas Gas Bhd (PetGas) reported a 27.44% drop in its net profit in its final quarter of financial year ended Dec 31, 2015 (4QFY15) to RM414.5 million or 20.95 sen per share, mainly due to lower share of profit from joint ventures, attributable to recognition of deferred tax assets (DTA) on investment tax allowance (ITA) granted for the Kimanis Power Plant in the corresponding quarter.

It recorded a net profit of RM571.3 million or 28.87 sen per share in 4QFY14.

Higher operating costs, driven by its focus to improve asset integrity under PetGas’ transformation initiatives, also impacted the group’s latest quarterly earnings, according to its bourse filing today.

“These were partially offset by unrealised forex gain on finance lease liabilities due to strengthening of the ringgit against US dollar during the quarter,” it added.

Revenue for 4QFY15 came in at RM1.14 billion, which was 2.26% higher than the previous corresponding quarter’s RM1.11 billion.

PetGas attributed the growth to higher gas processing revenue, in line with higher performance-based structure income, and higher regasification revenue due to higher storage fees.

Despite the weakening of its 4QFY15 bottom line, PetGas has declared a higher fourth interim dividend of 17 sen per share, payable on Mar 23. In comparison, it declared 15 sen per share in the previous corresponding quarter.

PetGas closed FY15 with a 7.83% growth in its net profit, to RM1.99 billion or 100.44 sen a share (RM1.0044), against the previous year’s net profit of RM1.84 billion or 93.15 sen a share. The group said this was due to recognition of DTA arising from ITA granted for plant rejuvenation and revamp project amounting to RM443.1 million.

Its turnover for FY15 came in at RM4.46 billion in FY15, up by 1.46% from the previous year’s RM4.39 billion.

“(Revenue growth was) primarily attributable to higher gas processing and gas transportation revenue, in line with higher reservation charge and capacity booking by Petronas under the new Gas Processing Agreement and Gas Transportation Agreements effective from Apr 1, 2014,” PetGas said.

While it acknowledged the challenging economic environment, PetGas said its performance is expected to remain steady in FY16, backed by its solid business models under its Gas Processing Agreement, Gas Transportation Agreements and Regasification Service Agreement signed with Petronas.

However, it said its utilities segment will be dependent on demand from petrochemical customers.

PetGas, an FBM KLCI component stock, fell 20 sen or 0.88% to close at RM22.40 today. In comparison, the benchmark index slipped 0.78% today to close at 1,664.17 points.

At the current price, PetGas has a market capitalisation of RM44.32 billion.