Malaysia's Petronas posts quarterly profit but cautious on outlook

Malaysia's Petronas posts quarterly profit but cautious on outlook

Malaysia's state energy firm Petronas Tuesday announced a 12 percent rise in
annual profits for a year ago, after it slashed spending to offset slumping
oil prices.

Income from Petronas and other oil-related revenues accounted for almost 40%
of state coffers a few years ago. "We are preparing ourselves for a very
uncertain second half of this year", Petronas group CEO Wan Zulkiflee Wan
Ariffin told reporters.

"I'm not sure what it (economic condition) will be like for the next three
to five years down the road, but when the times come, we will explain (to
the shareholders) about our programmes, outlook, oil price and our cash
position at that time", he said. "We still feel the outlook is uncertain",
Wan Zulkiflee said. "Our capex for this year is RM60 billion, so we are not
going to defer any of the (already) sanctioned projects".

"These steps included a restructuring of our organisation to increase its
effectiveness, optimisation of our manpower to eliminate redundancy and
slashing capital expenditure (capex) and operating expenditure (opex) by
RM50bil from 2016 to 2019", Wan Zulkiflee said.

The group's revenue for the year however dipped 17 per cent RM204.9 billion
from RM247.7 billion in 2015, reflected by the lower average prices in line
with the downward trend of key benchmark prices coupled with impact of lower
sales volume.

Its quarter-on-quarter net profit also saw a 85 per cent higher jump to
RM11.3 billion compared to RM6.1 billion in the previous quarter. "The one
advantage Petronas has is they resorted to cost cutting much earlier
compared to their (national oil company) peers in the region", Lee said.

Petronas will pay RM13 billion in dividend to the government for 2017, as
promised.

Unlisted Petronas, Malaysia's only Fortune 500 company, responded early last
year with cuts in capital and operating spending of 50 billion ringgit over
four years, starting with 15-20 billion ringgit in 2016.

While Petronas was forced to reduce its headcount by as many as 2,300 staff
past year in an effort to strengthen accountability and reduce duplication,
Wan Zulkiflee said, he was not expecting a major restructure in workforce
for FY17. That's lower than a 16 billion ringgit dividend Petronas has said
it would pay for 2016 and the 26 billion ringgit it paid in the year before
that.

Petronas' finances got a boost last month when Saudi Aramco agreed to invest
US$7 billion in its Refinery and Petrochemical Integrated Development
(RAPID) project that is slated to cost US$27 billion.

Meanwhile, for the Pacific Northwest Liquefied Natural Gas (LNG) project,
Wan Zulkiflee said, the group was still studying the conditions set out by
the Canadian Environmental Assessment Agency in its conditional approval
obtained past year before announcing Petronas' plans moving forward. "We are
looking at all options how to develop an LNG plant that will be very
competitive among other North American LNG plants".

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Link to Original Article:
http://clicklancashire.com/2017/03/17/malaysias-petronas-posts-quarterly-pro
fit-but-cautious-on.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com