Petronas records low first half year performance, strengthens resilience

KUALA LUMPUR, Sept 4 -- Petroliam Nasional Bhd (Petronas) recorded a lower financial performance for the first half of 2020, reflecting the uncertainties faced by the oil and gas industry due to COVID-19 pandemic, but the group aims to strengthen its resilience by deploying a three-pronged growth strategy. 

President and group chief executive officer Tengku Muhammad Taufik Tengku Aziz said the group is committed to undertaking all necessary measures in its path to recovery which would involve reshaping its portfolio mix, retooling its human capital equation and emphasising on focused execution with pace. 

He noted that the three-pronged growth strategies would provide screenshots to the group as it expects its 2020 performance to be severely affected by the low oil price and weak demand environment.

"On reshaping our portfolio mix, the group-wide exercise would involve high grading of the portfolio to balance between sustainability and ensuring high value returns to come.

“This means reviewing our geographical revenue and profitability across the globe," he said when presenting the group's financial performance for the first half year ended June 30, 2020.

In the same vein, Tengku Muhammad Taufik said Petronas would grow its presence in the renewable energy space as part of the three-pronged growth strategy.

The group has also established a Portfolio Intervention Transition Crew (PIT Crew) with best-fit talents to carry out its portfolio transition.

"The PIT Crew comprises senior leaders of current business in Petronas to help and steer them to ensure actionable plans developed for immediate execution. I am not leaving this to the hands of amateurs," he asserted.

Tengku Muhammad Taufik said Petronas would also aim to preserve cash and maintain its liquidity with focused cost-compression efforts, while planning for future-proofing its leaders and talents. 

He added that the reduction of capital expenditure by 21 per cent and operation expenditure by 12 per cent are on track with further savings expected by end-2020.

For the second quarter of 2020, the group recorded a loss after tax of RM21 billion compared to a net profit of RM14.7 billion year-on-year (y-o-y), mainly due to lower revenue and higher net impairment losses on assets.

Petronas recorded a lower revenue of RM34.04 billion for the second quarter ended June 30, 2020 from RM59.12 billion y-o-y, mainly due to the impact of lower average realised prices recorded for major products on the back of lower sales volume, mainly for petroleum products, gas and liquefied natural gas (LNG) and processed gas. 

For the first half of 2020, the national oil company experienced a loss after tax of RM16.5 billion for the period against a net profit of RM28.9 billion year-on-year following lower revenue and impairment loss.

Excluding impairment loss, the group would record a net profit of RM7.7 billion. 

The national oil company also recorded a revenue of RM93.6 billion, a decline of 23 per cent from RM121.1 billion year-on-year, largely driven by lower average realised prices for all products and lower sales volume, mainly from processed LNG. 

Total assets decreased to RM613 billion as at June 30, 2020 compared to RM622.4 billion as at Dec 31, 2019, primarily due to net impairment loss on assets.

The group was able to sustain positive levels of cash flows from operations at RM26.3 billion despite the softer results during the period. Capital investments for the first half of 2020 of RM14.8 billion were mainly attributed to upstream projects.

Total LNG production for the first half of 2020 decreased by 7.0 per cent to 13.2 million tonnes compared to 14.2 million tonnes in the first half of 2019. 


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