This article first appeared in The Edge Financial Daily on February 26, 2020

KUALA LUMPUR: Petronas Dagangan Bhd’s (PetDag) net profit jumped 171% to RM126.59 million or 12.7 sen per share for the fourth quarter ended Dec 31, 2019 (4QFY19), from RM46.68 million or 4.7 sen per share for the year-ago quarter.

The impressive set of results was attributed to higher sales volume and better gross profit following higher Mean of Platts Singapore prices. There was also an increase in interest income due to larger cash balances, said PetDag in a Bursa Malaysia filing. But higher advertising and promotion, depreciation and amortisation costs as well as network upgrade costs offset the earnings growth.

The board declared an interim dividend of 25 sen per share and a special dividend of 15 sen per share for 4QFY19, payable on March 26.

For the previous corresponding quarter, PetDag paid an interim dividend of 25 sen per share.

The exchange filing yesterday showed quarterly net profit growth, although quarterly revenue was almost flat at RM7.79 billion, versus RM7.9 billion for 4QFY18, as a 4% drop in average selling prices offset a 3% increase in sales volume.

For full FY19, PetDag’s net profit totalled RM829.54 million, 2.4% lower than the RM849.85 million for the preceding year. Annual revenue held steady at RM30.29 billion, compared with RM30.07 billion for FY18.

According to PetDag, the weaker profitability was mainly due to higher operating expenses, as stated above, offset by improved gross profit, higher sales volume, and increases in interest and income from Kedai Mesra.

The group said the volatility of oil prices, economic conditions and consumer sentiment will have an impact on the group’s profitability but that it will continue to focus on inventory management, supply and distribution efficiency as well as operating expenditure optimisation to ensure resilience. It said it plans to grow volume for its retail segment via newly-launched superior products and a focus on enhancing customer experience through nationwide expansion of an advanced retail intelligence platform that upgrades fuel payments among other retail experiences for Petronas users. It also plans to increase its profitability by pursuing strategic partnerships and enhancing product offerings.

Meanwhile, it said its commercial and liquefied petroleum gas business will continue to maximise value by providing superior value propositions through enhancing channel delivery and differentiated offerings, having competitive pricing as well as leveraging its superior logistics and distribution network to sustain existing markets and capture new ones.

Separately, PetDag announced yesterday the resignation of Norliwati Abdul Wahab from her position as chief financial officer, citing “staff mobility within the Petronas group” as a reason. She will be succeeded by 43-year-old Farzlina Ahmad Murad, who is the Head (Finance) at Strategy, Finance & Risk Department at Petronas which oversees 21 companies under the downstream business..