CEO Morning Brief

Petronas Gas’ 1Q Net Profit Up on Higher Product Prices and Lower Tax Expenses

Publish date: Tue, 23 May 2023, 08:47 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (May 22): Petronas Gas Bhd (PetGas) recorded a net profit of RM424.18 million for the first quarter of this financial year (1QFY2023), a 3.31% increase from RM410.58 million posted in the corresponding quarter a year earlier, owing to higher product prices and lower tax expenses of RM108.64 million.

The lower tax expenses were attributed to the imposition of the prosperity tax last year that impacted its tax expenses for 1QFY2022, which stood at RM150.73 million

PetGas also saw an increase in its revenue to RM1.67 billion in 1QFY2023 compared to RM1.46 billion in 1QFY2022, driven by higher contribution from the utilities segment as well as higher product prices.

According to its filing with Bursa Malaysia on Monday (May 22), the group’s earnings per share rose to 21.44 sen this quarter from 20.75 sen a year ago.

An interim dividend of 16 sen per share was declared, payable on June 20.

Despite registering higher revenue and net profit, PetGas’ gross profit declined 10.6% to RM547.08 million during the quarter under review, due to higher operating expenses, mainly relating to fuel gas, internal gas consumption and depreciation expenses.

As such, profit before tax dropped 5.3%, though this was cushioned by higher interest income from fund investments and a higher share of profit from joint venture companies.

PetGas has four reporting segments, namely gas processing, gas transportation, regasification and utilities. On prospects, the group states that “2023 is expected to remain robust, underpinned by the stable-earning contracts, however the high gas price may impact the group’s full-year results.”

It expects the gas processing segment to remain stable on the back of its long-term contracts and sustainable income stream under the second term of the Gas Processing Agreement.

Despite lower Regulatory Period 2 (RP2) tariffs, the gas transportation and regasification business segments are anticipated to continue contributing to healthy earnings, while the performance of the utilities segment will continue to be affected by high fuel gas prices.

“Amid the higher operating cost environment post-pandemic, the group will continue to strive for operational excellence as well as to strike the right balance between growth investments, financial prudence and shareholders' distribution,” PetGas concluded.

At market close, the stock went down 10 sen or 0.6% to RM16.98, translating into a market capitalisation of RM33.56 billion.

Source: TheEdge - 23 May 2023

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