Petronas in cost-optimisation with service providers, denies rumour on pay cut & retrechment

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KUALA LUMPUR (April 15): Petroliam Nasional Bhd (Petronas) president and CEO Datuk Wan Zulkiflee Wan Ariffin said Malaysia's national oil company was undertaking a cost-optimisation exercise with its service providers.

Petronas' cost optimisation exercise with its support-service providers comes at a time when current lower crude oil prices have curbed Petronas' income growth.

"Service providers are providing us professional services (equivalent to) a salary range of more than RM20,000 and up to even hundreds of thousands of ringgit," he told reporters, after the annual general meeting of Petronas' 69.86%-owned subsidiary Petronas Dagangan Bhd.

Wan Zulkiflee, who is also Petronas Dagangan (fundamental: 1.7; valuation: 1.1) chairman, had said this in response to a news report which indicated Petronas planned to retrench workers and reduce employees' salaries by 20%

He has denied the report, which quoted a Petronas memorandum to employees. It was reported that its upstream arm Petronas Carigali Sdn Bhd had requested workers to take the pay cut starting May 1 this year.
"That is a misreporting. There will be no salary cut for Petronas staff, including Petronas Carigali, and there will be no retrenchment of Petronas staff," Wan Zulkiflee said.

Meanwhile, Petronas Dagangan CEO and managing director Mohd Ibrahimnuddin Mohd Yunus said the company would offer RON97 fuel that complies with Euro-4M standard, beginning this September.

Mohd Ibrahimnuddin said Petronas Dagangan, which is the retail arm of Petronas, had not finalised the price for the fuel yet.

"At this juncture, we have not set the selling price yet. We will let the government to do that," he said.

Mohd Ibrahimnuddin said Petronas Dagangan currently sells diesel that complied with Euro-5 standard at two kioks, one each in Pasir Gudang and Gelang Patah Johor. He said the diesel was sold at a 10 sen premium to the current selling price.

At 3:03pm, Petronas Dagangan shares traded flat at RM20.90, for a market value of RM20.76 billion.

The stock had gained 23% this year, outperforming the KLCI's 5% rise.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)