KUALA LUMPUR (May 24): Lower margins dragged Hengyuan Refining Co Bhd’s net profit down by 75% to RM21.57 million or 7.19 sen per share in the first quarter ended March 31, 2019 (1QFY19), from RM86.81 million or 28.94 sen per share a year ago.

Quarterly revenue declined 3.3% to RM2.96 billion from RM3.06 billion previously (1QFY18), primarily due to a lower average price of US$70 per barrel, compared with US$76 a year ago, although sales volume was higher at 10.3 million barrels versus 10.2 million barrels last year.

In its stock exchange filing, Hengyuan said operating margin for the quarter was weak due to oversupply of products in the region.

Gross profit margin was supported by a stockholding gain of US$2.05 per barrel of processed crude, versus US$1.46 a year ago, resulting from an uptrend in the market-quoted crude price, rising from US$54 to US$67 per barrel during the quarter.

Hengyuan expects refining margins and crude prices to remain volatile in the near term, based on published forward market prices.

It said operational efficiency, safety performance, product quality, hydrocarbon hedging and financial risk management will continue to remain a key area of its focus in optimising the company’s performance.

It added that the construction of the new Euro4M Mogas processing unit is underway and that the company continues to focus on the completion of the unit to deliver compliant products.

Shares of Hengyuan finished seven sen or 1.2% lower today at RM5.78, for a market capitalisation of RM1.73 billion.