Tough start for Petronas as Q1 pre-tax profit slips 60 pct

This was posted on the back of a RM49.1 billion revenue, which was 26 per cent lower, compared with the RM66.2 billion recorded in the previous corresponding period.

"Lower prices across all products and higher net impairment on assets reduced profitability, which was partially offset by lower product and production costs and the impact of favourable exchange rate against the Ringgit," it said in a statement today.

"Concerns over moderate demand outlook and persistent oversupply will continue to pressure crude oil prices.

"Petronas expects performance to be also affected by the volatility in oil prices and foreign exchange rate," Petronas said.

However, the oil corporation pointed out that it would continue with its cost rationalisation efforts to remain competitive while pursuing efforts to drive operational efficiencies and effective delivery of growth projects that would bring value.

Elaborating on the results further, it said net profit and impairments for the quarter was recorded at RM4.6 billion against RM11.4 billion in the previous corresponding quarter.

Reduced revenue was mainly attributed to lower product prices following the prolonged downward trend of the benchmark Dated Brent and Japan Customs Cleared (JCC) prices, coupled with lower sales volume of crude oil and condensates, processed gas and petroleum products.

Total assets decreased to RM567.6 billion, as at March 31, 2016, compared with RM591.9 billion, as at Dec 31, 2015, which was primarily attributable to the impact of a comparatively lower US dollar exchange rate against the ringgit.

Similarly, shareholders equity decreased to RM364.7 billion from RM374.9 billion, as at Dec 31, 2015.

Gearing ratio decreased to 15.8 per cent, as at March 31, 2016, compared with 16.0 per cent, as at 31 December 2015.

Return on average capital employed was at 3.5 per cent compared with 5.1 per cent, as at Dec 31, 2015.

Petronas said cash flow from operating activities decreased 44 per cent compared with the corresponding quarter last year in line with lower revenue recorded for the quarter, it added.

Capital investments, totalling RM11.3 billion, was mainly attributed to the Refinery and Petrochemical Integrated Development project in Johor and upstream capital expenditure in Malaysia.

Upstream production volume in Malaysia and Petronas' group international equity production rose to 2.45 million barrels of oil equivalent (BOE) per day from 2.39 million BOE per day in 2015 as a result of higher Iraq production entitlement and new production stream from Indonesia, offset by natural decline.

Production entitlements to Petronas Group was up nine per cent at 1.82 million BOE per day.