Petronas' pre-tax profit slips 53 per cent in 2015

Petronas' pre-tax profit was 53 per cent lower at RM36.68 billion for the financial year ended Dec 31, 2015 from RM77.69 billion chalked up in the 2014 financial year.

Revenue dipped 24 per cent lower to RM247.66 million, during the period under review, from RM329.15 million recorded in 2014.

President and Group Chief Executive Officer Datuk Wan Zulkiflee Wan Ariffin attributed the lower results to the depressed oil price environment and net impairment on assets.

However, he said the company remained profitable, driven by its downstream business.

"The integrated oil and gas value chain has once again proven to be highly valuable to Petronas in this difficult period and we continue to ensure that the organisation retains this critical aspect of our business operating model.

"Our downstream business had a better year, benefitting from lower feedstock prices and higher profit margin, in fact, the segment recorded a financial performance with a profit after tax jumping 50 per cent to RM8.9 billion," he told a press conference after announcing Petronas' 2015 financial year performance.

Wan Zulkiflee attributed the key drivers of the segment to the realisation of post-acquisition synergies at Petronas' Melaka Refinery, Petronas Gas' transformation initiative, cross-business plant performance improvement initiatives and cost savings across Petronas' global lubricants business.

He said there was major progress in downstream segment key projects such as the Petronas Lubricants International's first lubricants blending plant in India.

The Pengerang Integrated Complex project was progressing as planned with the refinery and steam cracker construction on track.

For the upstream segment, there was a 3.0 per cent increase in production compared with 2014, driven by enhanced production and new production streams from Malaysia and Indonesia, as well as, additional production from Azerbaijan.

"However, the sharp and prolonged decline in oil prices resulted in a 64 per cent drop in the upstream segment's profit after tax to RM19.6 billion while non-cash impairments of RM18 billion brought this down further to RM1.6 billion for the year," he said.

For the fourth quarter alone, Petronas posted a pre-tax profit of RM1.22 billion compared with a pre-tax loss of 358 million in the same period in 2014, while revenue fell to RM60.1 billion from RM79.37 billion.

On outlook, Wan Zulkiflee said the next two years would continue to be challenging for the national oil and gas company as he expected the price of Brent crude to hover around US$30 per barrel this year after it averaged at US$52 per barrel in 2015.

"We will take cost-optimisation measures to another level to counter adverse impact to our business, which will include additional reduction in capital and operational expenditures of RM50 billion over the next four years, starting with RM15-RM20 billion in 2016.

"These cuts will impact some of our capital projects and at this point, we have taken the decision to re-phase the Petronas floating LNG 2 project, to be commissioned at a later date than originally planned," he added.