By Khairul Khalid
State petroleum corporation Petronas posted a steep fall in third-quarter earnings for financial year 2015 (3Q15) with its profit after tax (PAT) fell 91% year-on-year to RM1.4 billion.
Petronas attributed the poor results mainly to its upstream business that was hit by lower crude and liquefied natural gas (LNG) prices, as well as a RM5.4 billion non-cash write down in impairment charges, .
“External factors continue to be challenging for Petronas. The slow economic growth in China and oversupply in the market caused by the Organisation of Petroleum Exporting Countries’ unwillingness to cut production and imminent lifting of sanctions on oil from Iran means that there is no reprieve from low oil prices,” said Wan Zulkiflee Wan Ariffin, president and group chief executive officer of Petronas at a press conference today.
Petronas’ revenue for 3Q15 fell 25% year-on-year to RM60 billion. For the first nine months of 2015, Petronas’ revenue has fallen 25% year-on-year to RM187 billion, while PAT was down 57% year-on-year to RM24 billion.
Wan Zulkiflee said that the RM5.4 billion non-cash impairments were a necessary, prudent measure as the company braces for a long drawn-out period of low prices.
“However, we remain confident of being able to weather through this storm, given our cash flow from operations for 3Q15 of RM17 billion and year-to-date of RM51 billion are at levels expected given the external factors,” said Wan Zulkiflee.
Nevertheless, Petronas downstream business has grown, with PAT up 38% year-on-year to RM7.3 billion for the first nine months.
Wan Zulkiflee Wan Ariffin
For 3Q15, PAT for its downstream business segment increased 33% year-on-year to RM2 billion. Petronas pointed to higher refining margins marketing margins, as well as improved plant performance for refineries and petrochemical plants.
Despite the market uncertainties, Wan Zulkiflee said that Petronas remains committed to its capital expenditure projects which include Refinery and Petrochemical Integrated Development, the Pacific NorthWest LNG project in Canada, the LNG Train 9 in Bintulu, and two Petronas Floating LNG projects being constructed in South Korea.
Petronas plans to spend RM350 billion in capital expenditure over the next five years. It has also announced a lower dividend to the government, with an agreed RM16 billion dividend to be paid in 2016 compared to RM26 billion paid for this year.
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