KUALA LUMPUR (March 8): National oil firm Petroliam Nasional Bhd (Petronas) recorded a 21% decrease in profit after tax (PAT) for the fourth quarter ended Dec 31, 2018 (4QFY18) to RM14.3 billion from RM18.2 billion in the prior year, amid higher product costs, depreciation and amortisation as well as petroleum proceeds.

This was despite quarterly revenue rising 13% year-on-year to RM69.9 billion from RM61.8 billion, mainly due to the impact of higher average realised prices for all key products, which offset lower sales volume mainly for liquefied natural gas (LNG).

However, Petronas closed its full-year ended Dec 31, 2018 (FY18) stronger with PAT rising 22% to RM55.3 billion, against RM45.5 billion the year before.

This was on the back of higher revenue — up 12% to RM241 billion from RM223.6 billion in FY17 — and supported by net write-back of impairment of assets.

These were partially offset by higher net product and production costs, depreciation and amortisation as well as tax expenses, it said.

The better revenue for the year, added Petronas, was mainly due to higher average realised prices for all key products, partially offset by the impact from the strengthening of the ringgit against the US dollar as well as lower sales volume for LNG.

For the year, Petronas' cash flow from operating activities increased 14% to RM86.3 billion from RM75.7 billion in FY17.

Despite the better performance, Petronas shareholders' equity fell 2.4% to RM380.5 billion from RM389.8 billion the year before, as profit generated in FY18 was offset by dividends declared during the year, said the company.

Petronas paid RM26 billion in dividends to the government in 2018. The company is sticking to RM54 billion dividend to be paid in 2019, with the first tranche paid out in January.

Moving forward, Petronas expects to allocate "slightly over RM50 billion" in capital expenditure in 2019, with around RM30 billion slated for the upstream segment. The oil firm spent RM46.8 billion in capex last year, it added.

For the year, Petronas president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said the company has planned its operations with dated Brent average benchmarked at US$66/bbl. Brent averaged US$71.04/bbl in 2018.

"The oil price is expected to remain volatile in 2019, and uncertainty in various fronts will have a significant impact on prices," he said.

The group, however, is cautiously optimistic on its performance in 2019, on the back of "natural hedging" that the group as the upstream-dominant company increases its footprint in the downstream segment.

"In light of this volatility, we have to appreciate that Petronas is a very integrated company. We have sort of natural hedging with better margins [in different segments] when oil prices [move]. So we [can] ride through this volatility in a reasonable [manner]," he said.