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Thursday, November 21st, 2019

PetDag earnings down on lower selling prices

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by August 16, 2016 General
Uncertain market: Petronas Dagangan expects oil price to remain volatile, given the continued oversupply situation in the global market

Uncertain market: Petronas Dagangan expects oil price to remain volatile, given the continued oversupply situation in the global market

PETALING JAYA: Petronas Dagangan Bhd (PetDag) said lower selling prices has hurt its financial performance in the second quarter ended June 30, as net profit dropped by a fifth to RM214.9mil from RM273.2mil in the previous corresponding period.

The retail arm of state-owned Petroliam Nasional Bhd said its saw a challenging year ahead but remained focused on inventory management, supply and distribution efficiency, as well as operating expenditure optimisation.

In a filing with Bursa Malaysia, PetDag said group operating profit for the quarter was RM249.4mil, a drop of RM128.3mil compared with the corresponding quarter last year.

Meanwhile, group revenue for the quarter slipped 17% to RM5.3bil from RM6.4bil as a result of a decrease in average selling prices by 20% despite a higher sales volume by 3%.

The decrease in average selling prices was due to a drop in the Mean of Platts Singapore prices.

The group’s earnings were affected by a decrease in revenue of RM518.4mil in its retail segment, where the drop in average selling prices by 16% impacting both Mogas – the natural gas used by vehicles – and diesel.

The retail segment’s operating profit also registered a decline of RM107.4mil against the corresponding quarter of last year.

This was mainly due to the impairment of subsidy receivables of RM89.9mil and higher operating expenditure arising from higher depreciation and advertising and promotional activities.

Meanwhile, the decrease in revenue by RM615.7mil in its commercial segment was mainly due to the drop in average selling prices by 23%.

The decrease in average selling prices had mainly impacted revenue contribution from aviation and diesel.

The ease in the segment’s operating profit by RM8.8mil was mainly due to lower gross profit for diesel, in line with lower industry demand from exploration and production as well as the fishery sectors.

The group plans to push its retail segment for higher sales of petroleum products, leveraging on its superior products – Primax 95 with Advanced Energy Formula and Primax 97 Euro 4M with Advanced Energy Formula.

Its retail segment will further expand the availability of Euro 5 Diesel at selected stations in the second half of 2016. It will also focus on enhancing further customer experience at the service stations.

Meanwhile, its commercial segment will emphasise on value by improving margins in targeted product and market segments, leveraging on public and private-sector investments in infrastructure and construction projects.

The segment will also leverage on its logistics, services and differentiated offerings to sustain existing markets and capture new markets.

PetDag expects oil price to remain volatile, given the continued oversupply situation in the global market, where Brent has risen by 35% from US$34 per barrel in the first quarter of this year to US$46 per barrel in the second quarter.

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