KUALA LUMPUR (May 21): Petron Malaysia Refining & Marketing Bhd posted a first quarter net loss of RM83.68 million against a net profit of RM57.52 million a year earlier, as the Covid-19 pandemic and decline in crude oil prices resulted in inventory holding losses, weaker refining margins amid reduced sales volume during the country’s Movement Control Order (MCO).

Petron Malaysia said in its Bursa Malaysia filing today that revenue fell to RM2.24 billion in the first quarter ended March 31, 2020 (1QFY20) from RM2.75 billion. Petron, which also issued a separate statement on its financial results, said in the statement that revenue dropped mainly due to the negative impact of the Covid-19 pandemic and significant decline in crude oil prices.

“With the implementation of the MCO by the Malaysian Government, which started on 18 March 2020 to curb the spread of the virus, the industry saw a sharp decline in domestic oil demand, due to limited movement and economic activity. This resulted in an 11% drop in the company’s sales volume for the first quarter at 8.1 million barrels, compared to 9.1 million barrels last year.

"The uncertainties caused by the Covid-19 pandemic and oil price war among top producing countries led to an unprecedented global oil supply glut and a steep decline in prices of crude oil and petroleum products. Dated Brent price fell by 52% from its December 2019 average of US$67 per barrel to US$32 per barrel in March. 

"The drastic drop in prices resulted in inventory holding losses and further weakening of refining margins amid reduced sales volume, due to the MCO. These weighed heavily on the company’s performance, as it posted a gross loss of RM53 million compared to RM143 million gross profit in 2019. While expense reduction initiatives, as well as risk management efforts, helped the company cushion the impact of falling margin, it ended the quarter with an RM84 million net loss, a complete reversal of the RM58 million net profit posted last year,” Petron Malaysia said.

Petron Malaysia chairman Ramon S. Ang said in the statement that as of now, the company is focused on its immediate recovery, while keeping sight of its long-term strategic goals. 

During these difficult times, Petron Malaysia’s effort is geared towards maintaining the company’s resilience and keeping its people safe, besides helping its communities and assisting frontliners in the fight against Covid-19, according to Ang.

"In response to the pandemic, Petron (Malaysia) has initiated a number of efforts including the donation of PPEs (personal protective equipment) to frontliners and hospitals in seven states. Petron (Malaysia) and our dealers also extended much-needed assistance to affected communities and other stakeholders, with food items and Petron Gasul LPG (liquefied petroleum gas).

“We are confident that we can turn our performance around, once we overcome this global pandemic. We remain committed to completing our major projects at the refinery, as well as our network expansion activities, as soon as the situation allows,” he said.

At Bursa today, Petron Malaysia's share price closed four sen or 0.86% lower at RM4.62, for a market capitalisation of RM1.25 billion

The stock saw 211,200 shares traded.

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