PETRONAS today announced improved earnings for the first half of 2018, driven by the Group’s execution of its continuous business improvement initiatives coupled with increased commodity prices.
The Group recorded RM117.2 billion in revenue, up 8 per cent from RM108.1 billion in the first half of 2017, benefitting from ongoing internal efforts to optimise efficiency as well as higher average realised prices for all products and increased production. This, however, was largely offset by the effect of the strengthening of the Ringgit against the US Dollar exchange rate.
to RM26.6 billion from RM17.3 billion, compared to the first half of 2017. The improved results were posted on the back of higher revenue, lower net impairment on assets and well costs as well as other expenses, compared to the first half of 2017. The increase was partially offset by higher net product and production costs, coupled with higher tax expenses.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) registered a 15 per cent growth to RM52.2 billion, from RM45.2 billion in the first half of 2017.
The Group’s cash flow from operating activities also increased 5 per cent to RM41.7 billion, compared to RM39.8 billion in the first half of 2017.
Total assets increased to RM610.7 billion as at 30 June 2018, from RM599.8 billion as at 31 December 2017, primarily due to higher cash and fund investments.
Shareholders’ equity of RM389.2 billion decreased by RM0.6 billion, mainly due to the approved final dividend of RM16.0 billion for the financial year ended 31 December 2017 and the interim dividend of RM5.0 billion for the current financial year. The decrease was also contributed by movements in foreign currency translation reserves. Nevertheless, the decrease in equity was softened by the profit generated during the first half of 2018.
Gearing ratio of 16.3 per cent as at 30 June 2018, increased marginally as compared to 16.1 per cent as at 31 December 2017. Return on Average Capital Employed (ROACE) increased to 11.8 per cent from 9.8 per cent previously, in line with higher profit recorded.
Capital investments for the first half of 2018, was RM19.8 billion, mainly attributed to the Pengerang Integrated Complex (PIC) in Johor.
Quarter-on-quarter, PETRONAS’ performance for the second quarter of 2018 also improved. Revenue grew to RM59.2 billion, a 15 per cent increase from RM51.6 billion in the second quarter of 2017, on the back of higher average realised prices mainly for petroleum products and crude oil and condensates. This was largely offset by the effect of the strengthening of the Ringgit against the US Dollar exchange rate.
PAT of RM13.6 billion, registered a marked improvement of 94 per cent compared to RM7.0 billion in the second quarter of 2017. Similarly, the strong performance was contributed by higher revenue, lower net impairment on assets and other expenses compared to the second quarter of 2017. These were, however, partially offset by higher tax expenses and increased net product and production costs recorded during the quarter.
EBITDA increased by 32 per cent to RM27.2 billion, from RM20.6 billion in the second quarter of 2017.
The Group’s cash flow from operating activities decreased by 10 per cent to RM19.7 billion, from RM21.8 billion in the second quarter of 2017, due to higher working capital and taxes paid which were partially offset by higher average realised prices.
PETRONAS continues to maintain its credit ratings (Moody’s A1, S&P A-, Fitch A-), a reflection of its financial strength and stable outlook. This further reflects the Group’s resilience and ability to weather uncertainties, while maintaining a solid overall performance in an improved oil price environment.
Total production volume for the first half of 2018, was 2,383 thousand boe per day compared to 2,342 thousand boe per day in the first half of 2017, mainly due to higher liquid production from international assets.
Total LNG sales volume for the first half of 2018 was 14.48 MMT, lower by 0.21 million tonnes as compared to the first half of 2017, mainly attributable to lower volume from LNG plants.
Meanwhile, Malaysia average sales gas volume was 2,788 mmscfd, higher by 43 mmscfd compared to the first half of 2017, mainly due to higher demand.
PETRONAS, through its wholly-owned entity, North Montney LNG Limited Partnership (NMLLP), successfully completed the Purchase and Sales Agreement (PSA) transaction for the acquisition of participating interest in the LNG Canada project on 17 July 2018. With this, PETRONAS effectively owns 25 per cent participating interest in the LNG Canada joint venture.
PETRONAS has successfully implemented measures to reduce greenhouse emissions through flaring reduction, gas reinjection and condensate recovery, as well as the capturing and monetisation of previously vented gas. These efforts, in addition to the reduction in gas emission of 71 mmscfd, have resulted in sales value of RM109 million.
Overall Equipment Effectiveness (OEE) stood at 93.0 per cent across all business segments. Domestic refineries and the refinery in Durban, South Africa, recorded OEE of 89.0 per cent and 93.1 per cent respectively. Both refineries in Melaka and Durban went through plant turnaround exercise during the first half of 2018.
The Petrochemical business achieved a 5 per cent increase in EBITDA of RM3.7 billion and a 3 per cent improvement to RM2.5 billion in PAT while operating at 97.6 per cent Plant Utilisation, despite one major statutory turnaround during the first half of 2018.
PETRONAS Dagangan Berhad posted an increase of 15 per cent in PAT of RM0.5 billion compared to the first half of 2017, with retail business recording a 4 per cent increase in sales volume between Quarter 2 and Quarter 1, surpassing the market average. The domestic Lubricants business also achieved an increase in PAT by 53 per cent in the first half of 2018.
The Pengerang Integrated Complex (PIC) continues to progress on track, achieving 92 per cent completion as at 30 June 2018. In May this year, PETRONAS and Saudi Aramco launched the corporate identity of their Refinery and Petrochemical joint ventures, namely Pengerang Refining Company Sdn Bhd. (PRefChem Refining) and Pengerang Petrochemical Company Sdn Bhd. (PRefChem Petrochemical), or collectively known as “PRefChem”, following the completion of the transaction in March 2018. PIC remains on schedule to achieve Ready for Start-Up (RFSU) status in 2019.