KUALA LUMPUR (May 18): The prolonged downtrend in crude oil prices and global supply glut continued to batter Petroliam Nasional Bhd’s (Petronas') earnings as its profit after tax (PAT) for the first quarter ended March 31, 2016 (1QFY16) tumbled 60% to RM4.57 billion, from RM11.4 billion a year ago.

Revenue for the quarter declined 25.77% to RM49.13 billion, compared with RM66.19 billion recorded in 1QFY15, which drove its earnings before interest, tax, depreciation and amortisation (EBITDA) down 29% to RM15.605 billion, compared with RM21.943 billion a year ago.

The group attributed its weak PAT to lower prices across all products and higher net impairment on assets, which was partially offset by lower product and production costs, and the impact of favourable foreign exchange rates.

Meanwhile, the group attributed its lower revenue to lower average realised product prices, following the protracted downtrend of key benchmark prices (Dated Brent and Japan Customs Cleared or JCC), coupled with the impact of lower crude oil and condensate, processed gas, and petroleum products sales volume.

Petronas said the drop was partially offset by favourable US dollar exchange rates against the ringgit.

Total assets decreased to RM567.6 billion as at March 31, 2016, from RM591.9 billion as at Dec 31, 2015, due to the weakening of the US dollar exchange rate against the ringgit.

It is largely because of the same reason that shareholders’ equity declined to RM364.7 billion as at March 31, 2016, from RM374.9 billion as at Dec 31, 2015.

Gearing ratio decreased to 15.8% as at March 31, 2016, compared to 16% as at Dec 31, 2015, due to lower borrowings on the back of the weakening US dollar exchange rate against the ringgit.

Its return on average capital employed (ROACE) also declined 3.5% as at March 31, 2016, compared with 5.1% as at Dec 31, 2015, in line with lower profit in the period, as compared to the same period in 2015.

In a press release, Petronas said upstream production volume in Malaysia and the group’s international equity production volume rose to 2.45 million barrels of oil equivalent (BOE) per day from 2.39 million BOE per day in 2015, as a result of higher Iraq production entitlement and new production stream from Indonesia, which was offset by natural decline.

Production entitlements to Petronas was up 9% to 1.82 million BOE per day, while total liquefied natural gas (LNG) sales volume decreased 9% to 7.35 million tonnes, as compared to the corresponding quarter in 2015, following lower production from Petronas LNG Complex in Bintulu, Sarawak.

Meanwhile, limited trading opportunities reduced the sales volume of petroleum products by 3.4 million barrels, to 69 million barrels; and crude oil by 3 million barrels to 55.3 million barrels; while petrochemical products sales volume grew by 0.1 million metric tonnes due to higher production.

On prospects, Petronas said concerns on moderate demand outlook and persistent oversupply will continue to pressure crude oil prices.

Thus, the national oil and gas company expects its performance to continue to be affected by volatility in oil prices and foreign exchange rates.

“Petronas will continue with its cost rationalisation efforts to remain competitive, while pursuing efforts to drive operational efficiencies and effective delivery of growth projects that bring value,” it added.