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Petronas in stronger position this year

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Syndicated News
Written by Syndicated News

Committed to paying dividend of RM13 billion to government this year

KUALA LUMPUR — March 14, 2017: Petronas is in a stronger position heading into this year, after the transformation undertaken last year ensured its sustainability and future resilience.

With the key prerequisites in place to transform the company and with the anticipated recovery in the market, the national oil company is well-positioned to face future challenges.

“Our deliberate and sequential efforts to restructure Petronas, reduce costs and improve performance, have started to bear fruit and improved our underlying performance, as shown in the results.

“We are confident the transformation will ensure Petronas’ sustainability and future resilience,” said Petronas President/Chief Executive Officer Datuk Wan Zulkiflee Wan Ariffin after announcing Petronas’ performance for the financial year ended last December 31.

The company’s pre-tax profit for FY16 slipped eight per cent to RM33.7 billion on the back of 17 per cent fall in revenue to RM204.9 billion, in line with the lower average of crude oil prices last year.

Net profit, however, grew 12 per cent to RM23.5 billion, mainly due to lower operating expenditures and tax expenses partly offset by the lower average prices.

The group ended FY16 with strong credit rating, low gearing of 17 per cent and a healthy cash balance realised from financial discipline and cost control initiatives.

Wan Zulkiflee said that while global oil market experienced a rebalancing, its outlook remained uncertain, thus the group would continue to push for higher productivity and operational excellence for this financial year.

In FY16, the group managed to reduce controllable costs by eight per cent, or RM4.1 billion, as compared to FY15.

The operation optimisation through Petronas’ industry-wide programme, Cost Reduction Alliance 2.0, or better known as Coral 2.0, was expected to continue to generate cost savings.

While Petronas was forced to reduce its headcount by as many as 2,300 last year in an effort to strengthen accountability and reduce duplication, Wan Zulkiflee is not expecting a major restructure in the workforce for this year.

“In 2017, we aim to continue the momentum to rein in cost and efficiency and ensure that the mindset change that focuses on ‘doing more with less’ will continue to be an integral part of Petronas’ work culture,” he said.

For the Pacific Northwest Liquefied Natural Gas (LNG) project, Wan Zulkiflee said the group was still studying the conditions set out by the Canadian Environmental Assessment Agency in its conditional approval obtained
last year before announcing Petronas’ plans moving forward.

On the Pengerang integrated complex, the project’s progress is ahead of schedule at 54 per cent at the end of last year and at nearly 60 per cent end of last month.

According to Wan Zulkiflee, the company is confident of paying a dividend of RM13 billion to the government this year. The amount was decided based on the group’s performance last year.

“This was made after discussions with the government last year. We are very thankful that our shareholders are very understanding.

“Our plans for capital expenditure and investment have never been adjusted or distracted due to the dividend requirements.

“I’m not sure what it (economic condition) will be like for the next three to five years down the road, but when the time comes we will explain (to the shareholders) about our programmes, outlook, oil price and our cash position at
that time,” he said.

Last year the dividend totalled RM16 billion. — Bernama

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