Petronas Q2 net profit up 53% at RM18bil

By DANIEL KHOO
danielkhoo@thestar.com.my

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) posted a 53.8% jump in net profit to RM18.3bil for its second quarter ended Sept 30, 2011 from RM11.9bil a year ago due to higher prices across its product range. However, the impact of the better prices was partially offset by the stronger ringgit against the US dollar.



The second-quarter revenue also increased by 26% to RM71.8bil from RM57bil previously.

Dividends paid to the Government amounted to RM21bil year-to-date, which is about half of Petronas' year-to-date net profit totalling RM40bil. Dividends paid by Petronas will be capped at 30% of its net profit in the financial year ending Dec 31, 2013 (FY13) after an agreement with the latter earlier this year.
Ratilal: ‘We have a strong balance sheet.’

“For this calendar year we are (expecting) to pay a total of RM30bil to the Government. That amounts to around 50% of Petronas' profits. Going forward, we have to spend a lot on capital expenditure (capex). We have to find the balance between capex and paying out dividends,” Petronas executive vice president for finance Datuk George Ratilal said in a presentation of its financial performance yesterday.

Petronas expects to rake in RM70bil to RM75bil in profits before tax by the year-end.

The national oil company said its overall performance had improved as reflected in the higher return on average capital employed of 23.6% in the year to Sept 30 from 17.5% in previously.

“We have a strong balance sheet,” said Ratilal. Petronas said in the media presentation that its balance sheet remained robust with total assets growing by 7.6% quarter-on-quarter to RM472.4bil with total debt/total assets ratio remaining at 0.11 times.

It said its year-on-year cash from operations rose 61% to RM47.4bil compared with the same period last year due to higher earnings while year-on-year capital expenditure spending rose by 43% to RM24bil.

Petronas had earlier announced that it was changing its financial year-end from March 31 to Dec 31, which would mean the company would have only a nine months in FY11.

President and CEO Datuk Shamsul Azhar Abbas said he remained cautious on the global economy moving forward and that current oil prices of above US$100 remained “too strong” for the fragile world economy.

He expected the world economy to deteriorate further due to the dire economic situation in the West and weakening economic indicators in China.

“We will not be surprised if the second recession comes next year. If you were to ask me what would be the projection of crude oil prices next year, we maintain it is going to be in the range of US$85 to US$87 per barrel,” Shamsul said, explaining later that this was the price range used for Petronas' forecast for 2012 as well.

On the international front, Shamsul said the company was “taking a hit” on gas production in Egypt and Sudan due to political uprisings in these countries. It is also exploring opportunities in Myanmar, where it already has a local partner, although negotiations are still at the early stages.

Petronas also said it was exploring business opportunities in Japan after the Fukushima nuclear incident there, which would increase demand for power generation from non-nuclear sources.