Friday 29 Mar 2024
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KUALA LUMPUR (June 16): Hengyuan Refining Company Bhd reported a net loss of RM124.12 million for its first quarter ended March 31, 2020 (1QFY20), from a net profit of RM21.57 million a year ago, as it was impacted by low refining margins following a sudden drop in global oil prices, while demand was impacted by the pandemic outbreak.

The slump in global oil prices was the result of a price war, it said, while the demand impact came from the implementation of the movement control order by the Malaysian government in mid-March to curb the spread of Covid-19, it said in a stock exchange filing. Quarterly revenue fell 13.81% to RM2.55 billion from RM2.96 billion last year, as sales volume shrank to 9.9 million barrels from 10.3 million.

“Refining margins were also adversely affected by higher crude premiums and stock holding losses, as the market saw crude prices falling from US$67 to US$32 per barrel. These were cushioned by the effects of both the margin and commodity hedges, which the company has put in place as part of its risk management measures,” it said. 

It also recorded forex loss of RM79.1 million in the current quarter, largely attributed to its U.S. dollar denominated borrowings, as ringgit weakened from RM4.10 to RM4.31 against the US dollar.

Going forward, Hengyuan said the oil market recovery largely depends on the cooperation between the Organization of the Petroleum Exporting Countries (OPEC) and its partners, while global economies slowly re-open with the gradual easing of lockdowns.

It also updated that its Euro 4M Mogas gasoline project, which was supposed to be completed in the fourth quarter, has now been delayed due to the Covid-19 outbreak and consequent international lockdowns. The delay, however, is not expected to have any significant adverse effects on its operations or ability to supply to customers, it said.

“Should additional volumes are required by our customers, the company may choose to meet these orders with internally-produced volumes or by purchasing additional volumes from the open market,” it added.

Hengyuan shares closed 10 sen or 2.84% higher at RM3.62 today, giving it a market capitalisation of RM1.09 billion. The stock has risen 58% from its recent low of RM2.29 on March 23. 

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