KUALA LUMPUR (May 24): After a plunge in net profit in its first quarter on a lower crack spread, Hengyuan Refining Co Bhd expects better margins in its second quarter of 2018, due to the pick up in oil prices.

The refiner has seen margins picking up in May, suggesting there is support for the crack spread going forward, said chief commercial officer William Chen Jung Huei.

“Our margins are sustainable but they may not be as good as last year,” Chen told reporters today, following the group’s annual general meeting today.

Meanwhile, the Euro 4M Mogas project which was originally targeted to be completed in the second half of 2018, has been rescheduled to be completed in the fourth quarter of 2019.

In the meantime, the group’s scheduled mandatory turnaround in the third quarter of this year will see it ceasing production for two and a half months.

However, Hengyuan chief executive officer David Keat said production will normalise in the fourth quarter. Chief financial officer Foo Ai Li added that there would be no disruption of its delivery to customers.

Hengyuan's net profit fell 68.94% to RM86.81 million in 1QFY18, caused by a lower crack spread in motor gas. 

An oversupply of refined products in the region has exacerbated the decline in the group’s earnings.

At midday break today, Hengyuan dipped 0.98% or 7 sen to RM7.08, with 961,400 shares done.