Petronas Dagangan's 1Q profit jumps 33% on lower operating expenditure

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KUALA LUMPUR (May 11): Petronas Dagangan Bhd recorded a 32.7% jump of its net profit to RM205.77 million in the first quarter ended March 31, 2015, from RM155.08 million a year ago, mainly due to lower operating expenditure.

However, Petronas Dagangan’s ( fundamental: 1.7; valuation:1.1 ) revenue for 1QFY15 declined 26.4% to RM6.1 billion, compared to RM8.29 billion last year, mainly as a result of a decrease in average selling price by 22%, coupled with a decrease in sales volume by 6%.

The group declared an interim dividend of 12 sen per share for quarter ended March 31, 2015. The ex-date was May 25, while payment date was on June 25.

Petronas Dagangan said the decrease in average selling price was in line with the decline in Means of Platts Singapore (MOPS) prices beginning June 2014.

“Group operating profit for the quarter was RM287.2 million, an increase of RM58.3 million compared to the corresponding quarter last year, mainly as a result of lower operating expenditure by RM64.8 million and higher other income by RM19.9 million. This was partially offset by lower gross profit by RM26.4 million,” it said.

It said the reduction in operating expenditure was mainly due to variation in yearly bonus payment, resulting in lower manpower expenses for 1Q compared to last year.

In addition, lower marketing and promotions expenses and foreign exchange gain due to strengthening of US dollar against the ringgit, had further contributed to the lower operating expenditure, it said.

“Lower gross profit was mainly as a result of lower sales volume contribution from retail segment,” it added.

“Despite overall reduction in sales volume, gross profit was higher, arising from efforts undertaken to improve margins. Improvement in margins per litre were mainly contributed by Bitumen, Diesel and liquid petroleum gas (LPG).” it said.

Moving forward, the company expects financial year 2015 to remain challenging.

“The directors are of the opinion that the economic and business environment will continue to be challenging in 2015. The group is currently undertaking measures to address the volatile oil price environment, including cost reduction efforts, inventory optimization, and supply and distribution efficiency.

“Concurrently, the group will pursue ongoing efforts, including further strengthening of the brand, sweating of existing assets and continuously enhancing customer relationship management,” it added.

Petronas Dagangan's share price dropped four sen or 0.18% to RM21.64 today, giving it a market capitalisation of RM21.54 billion.

(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.)