By Khairul Khalid
George Ratilal
Petroliam Nasional Bhd’s (Petronas) profit after tax plunged 27% for the full financial year 2014 (FY14) to RM47.6 billion, partly due to RM22.6 billion impairments and collapse of crude oil prices.
“The RM22.6 billion impairments are non-cash items. We have had to reassess the value of our assets and write down RM22.6 billion due to the fall in crude oil price,” said George Ratilal, Petronas’ group chief financial officer (CFO) during a press conference.
Ratilal said that despite Petronas’ good cash flow, a stronger US dollar and the company’s 5% increase in upstream in production during 2014, the RM22.6 billion impairments made a huge dent on Petronas’ earnings.
Petronas profit before tax (PBT) for FY14 fell 18% year-on-year (y-o-y) to RM77.7 billion on the back of a 4% increase in revenue yoy to RM329 billion.
According to Ratilal, Petronas suffered its first ever quarterly losses in the fourth quarter of financial year 2014 (4Q14) since the company started reporting its financial results on a quarterly basis.
Petronas recorded RM7.3 billion losses in 4Q14, down from RM12.8 billion profit in 4Q13.
Shamsul Azhar Abbas
“The oil price fluctuations are beyond our control but despite the price fall, our financial results is fairly respectable compared to other oil companies,” said outgoing Petronas chief executive officer (CEO) Shamsul Azhar Abbas, whose tenure ends at the end of next month.
In April, Shamsul will be replaced by Wan Zulkiflee Wan Ariffin, the company’s current executive director and chief operating officer (COO).
Shamsul added that Petronas would have to be more conservative and prudent with its spending from now on due to the new economic climate.
Petronas is projected to cut capital expenditure (capex) by 10% to 15% amounting to an estimated RM20 billion between 2015 and 2019. Operating expenditure (opex) will be slashed by an estimated 30%.
Shamsul also added that Petronas would no longer be awarding risk sharing contracts (RSCs) for marginal oilfields unless the price of crude oil is more than US$80 per barrel. The RSC’s would mostly be undertaken by Petronas Carigali’s vehicle Vestigo instead.
“This is the new reality. It will be an ongoing process. We will continue to assess and monitor the situation,” said Shamsul.
The outgoing CEO is confident that Wan Zul is the right candidate to replace him in the company’s top post.
“Petronas is thrilled for him to succeed me as CEO. We would like to thank the Prime Minister (PM) Najib Razak for his wisdom of choice and trusting in Petronas’ internal succession process,” said Shamsul.
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