Petronas juggles lower earnings
Farah Saad & Doreen Leong | 12 Dec 2014 00:30
Petroliam Nasional Bhd (Petronas) is experiencing one of the toughest challenges of its corporate history. Revenue and profit are plunging. Its RM109 bil Canadian dream gas project could become a nightmare and another RM90 bil in other projects it announced in the last five years may have to be reviewed.
The slump of more than 40% in world crude oil prices in the last six months, from US$112 to US$64 per barrel, has affected its bottomline. Each US dollar fall in the world oil price has a RM1 bil impact on Petronas’ pre-tax profit.
Poor market sentiment has also affected at least three of Petronas’ five listed companies – Petronas Dagangan, Petronas Chemicals and Petronas Gas, which have lost a combined market capitalisation of RM30.3 bil this year alone. The rest of the industry catches cold when Petronas sneezes. When the oil company announced a 15-20% cut in its capex on Dec 1, oil-and-gas stocks on Bursa Malaysia fell by 5-20% the next day.
Its woes does not end there. Although it has said it will declare lower dividends to the government next year due to falling profits, a deputy finance minister sent it a message that the quantum of its dividend was not up to it but rather to the government.
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