PETROLIAM Nasional Bhd’s (Petronas) net profit plunged 71% to RM4.1 billion in the fourth quarter of 2019 from RM14.3 billion in the same period the previous year.

The national oil company said this was mainly due to net impairment of assets and lower revenue, which was partially offset by lower tax expenses. 

Revenue for the fourth quarter ending December 31 fell 8% to RM 64 billion from RM69.9 billion in the same quarter the previous year, due to lower average realised prices for major products.

This was partially offset by the impact of higher sales volume, mainly for petroleum products and crude oil and condensates, Petronas said at a press conference today.

For the full financial year ended December 31, 2019, Petronas recorded a net profit of RM40.5 billion, 27% lower than the RM 55.3 billion registered in the previous year.

The decline in net profit is attributable to lower revenue and net impairment of assets amounting to RM7.3 billion. However, these were partially offset by lower tax expenses. 

Revenue, on the other hand, dropped 4% to RM240.3 billion against RM251.0 billion in the preceding year, mainly due to lower average realised prices for major products. 

The decrease was partially offset by the impact of higher sales volume mainly for petroleum products and LNG, coupled with the effects of weakening of the ringgit against the greenback. 

Petronas’ capital expenditure (capex) spending for FY2019 amounted to RM47.8 billion, close to the RM50 billion guidance. 

Petronas president and group chief executive officer  Wan Zulkiflee Wan Ariffin said the year remained difficult as the industry continued to be marred by consistent and prolonged volatility. 

“Against this challenging landscape, Petronas has shown strong resiliency through its operational and financial performance for 2019,” he said. 

As for 2020, Petronas is expecting headwinds in the form of geopolitical uncertainties, prolonged trade tensions and near term demand disruption due to the Covid-19 outbreak. 

“Looking ahead, market volatility is expected to persist. We will remain steadfast in executing our strategies and sustaining our operational efficiencies while maintaining fiscal discipline,” he said.

The group will also maintain its capex at around RM50 billion for 2020.

Zulkiflee said the allocation for domestic operations will be increased by 10% to the tune of RM26 billion to RM28 billion. – February 26, 2020.