Petron's profit falls 70.7% in 1Q

by **Cals** Wed 25 May 2016, 01:37

Petron's profit falls 70.7% in 1Q

By Sangeetha Amarthalingam / theedgemarkets.com | May 24, 2016 : 6:34 PM MYT

KUALA LUMPUR (May 24): Petron Malaysia Refining and Marketing Bhd’s first quarter ended March 31, 2016 (1QFY16) saw net profit plunge 70.7% to RM16.6 million or 6.15 sen per share, from RM56.8 million or 21.05 sen per share last year.

The contraction in margins and sale of higher cost inventory at lower prices resulted in a lower net profit, Petron told Bursa Malaysia in a filing today.

Revenue dropped almost 10% to RM1.65 billion in 1QFY16, from RM1.8 billion last year.

“Petron’s sales volume grew by 14% or 8.2 million barrels across all major segments. The combined retail and commercial sales rose by 9%, driven by the company’s expansion programme and successful `Fuel Happy’ campaign,” it said.

In a separate statement, Petron said the increase in sales volumes partially offset the drop in oil prices, which led to lower sales revenue.

“Benchmark Brent crude dropped by about 37% in 1QFY16, averaging only US$34 per barrel versus 1QFY15’s average of US$54,” it said.

Petron added that the differential between Brent crude prices and middle distillates such as diesel, narrowed in 1QFY16, compared with 2015.

“The contraction in margins and the sale of higher cost inventory at lower prices, resulted in a net income of about RM17 million for 1QFY16, compared to RM57 million last year,” it said.

On future prospects, the group said it remains optimistic with the implementation of its stategic programmes aimed at reaching more customers and boosting operational efficiencies.

“Our increasing market presence, upgraded value chain, and the use of innovative technologies, will help us sustain our growth.

“The continued recovery in crude and finished product prices and the dynamic Malaysian economy will have a positive impact on Petron in the coming months,” said its chairman Ramon S.Ang.

Together with its sister company Petron Fuel International Sdn Bhd, and Petron Oil (Malaysia) Sdn Bhd, Petron has more than 560 stations.

It closed five sen or 0.95% lower at RM5.23 today, for a market capitalisation of RM1.42 billion.