KUALA LUMPUR (Nov 2): Petroliam Nasional Bhd's principal domestic marketing arm Petronas Dagangan Bhd (PetDag) saw a 36.46% increase in net profit to RM218.88 million for its third quarter ended Sept 30, 2015 (3QFY15) from RM160.34 million, mainly on higher gross profit, lower operating expenditure and higher other income.

With the improved earnings, PetDag has declared a higher interim dividend of 14 sen per share for the quarter — payable on Dec 4 — compared to the 12 sen declared for the same time last year.

In its quarterly Bursa Malaysia disclosure today, PetDag said its group operating profit for the quarter came in at RM301 million, up RM70.3 million, as a result of a RM33.5 million rise in gross profit, a RM15.9 million decrease in operating expenditure, and a RM20.9 million increase in other income.

The higher other income was mainly due to an accounting reclassification from the implementation of the goods and services tax, which has no profit impact, and higher interest income.

"Higher gross profit was a result of higher margin contribution from retail and commercial segments. The reduction in operating expenditure was mainly due to lower advertising and promotion expenses, foreign exchange gain and other cost reduction efforts," said the Bursa note.

However, the group's revenue for the quarter dipped by 20.63% to RM6.53 billion from RM8.23 billion in the previous corresponding quarter, largely as a result of a decrease in average selling price and sales volume by 18% and 3% respectively.

Meanwhile, PetDag's cumulative nine-month (9MFY15) profit rose 39.26% to RM697.86 million from RM501.13 million last year — largely due to lower operating expenditure, higher other income and higher gross profit.

However, its cumulative revenue fell 23.16% to RM19.12 billion from RM24.89 billion, mainly due to the same reasons as those affecting its latest quarterly revenue decline.

Moving forward, PetDag noted that uncertainty in the crude oil markets on the potential impact of the lifting of Iran sanctions and increased Organization of the Petroleum Exporting Countries (OPEC) production continue to put downward pressure on oil prices.

"The directors are of the opinion that the economic and business environment will continue to be challenging in the remaining months of 2015.

"The group will continue to implement measures such as inventory management strategy and operating expenditure management as parts of the cost reduction efforts as well as pursuing ongoing efforts and initiatives to ensure the company remains resilient," it added.

PetDag's shares closed unchanged at RM22.50 today for a market capitalisation of RM22.35 billion.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)