FOCUS-Petronas profit down, sees better prospects
04:04 a.m. Jul 06, 1999 Eastern
By Syed Azman
KUALA LUMPUR, July 6 (Reuters) - Malaysia's national oil firm
Petroliam Nasional Bhd (Petronas) reported on Tuesday a 32 percent
drop in net profit for 1998/99, despite record revenue.
Equities analysts, who had widely forecast a rise in profit, said
Malaysia's largest company had suffered more severely than expected
from a sharp decline in international crude prices, which eroded
Petronas said its performance in the year ending March 31, 2000,
would be better, bolstered by stable oil prices and regional economic
The firm posted a net profit of 6.81 billion ringgit ($1.8 billion)
1998/99 against a 9.95 billion profit in the previous year.
``As oil prices remain stable as of today and as the economies in the
region continue to improve, we are confident that things will be the
same or if not better for the current financial year,'' Petronas chief
executive Hassan Marican told a news conference.
Analysts said Petronas earnings were affected by poor oil prices but
that current year performance would improve with higher oil prices
an anticipated economic recovery in Malaysia.
Hassan said oil prices were likely to remain at present levels at least
another quarter, although prices would depend on demand and the
discipline among producers on the output quota.
Malaysia's benchmark Tapis crude oil had risen to $17.00 per barrel
June from $12.24 in January.
Petronas chairman Azizan Zainul Abidin said although oil prices might
have recovered, ``the possibility of returning to the pre-1997 levels
appears unlikely for some time to come.''
Petronas said revenue rose 21 percent to 42 billion ringgit due to higher
contributions from the group's overseas operations.
``International revenue accounted for 34 percent of Petronas' group
turnover, surpassing the 30 percent global revenue target six years
ahead of the 2005 deadline,'' Azizan said.
But Petronas said profit margins were under severe pressure from the
depressed oil prices. The average price of Malaysian crude declined
30 percent during the financial year to $12.97 a barrel, compared to
$18.60 in 1998.
A slump in energy demand in the Asia-Pacific region also translated
lower sales, the firm said.
Overall crude gross sales volume was 7.4 percent lower at 221.5
million barrels from 239.2 million barrels in 1998.
With the inclusion of South Africa's Engen, now a wholly owned
subsidiary, Petronas reported a 33.6 pct increase in group refined
petroleum products sales volume from 185.4 million barrels to 247.8
Gas sales volume fell slightly to 408.9 million British thermal units
415.1 million due to lower industrial demand.
Petronas said Malaysia's crude oil and condensate production for the
year was unchanged at 261.6 million barrels, with its share of the
at 71.4 percent.
It said its international oil production was expected to exceed 100,000
barrels per day by the end of the year as new development projects
Iran, Sudan and Vietnam came on stream.
On its downstream activities, Petronas said its two integrated
petrochemical complexes in the eastern Terengganu and Pahang states
were scheduled to come on stream from 2000.
``The coming onstream of these facilities will enable the group to derive
a significantly higher revenue contribution from the petrochemicals
business,'' it said.
($1 - 3.8 ringgit)
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