KUALA LUMPUR (Aug 29): Fuel retailer Petron Malaysia Refining & Marketing Bhd (KL:PETRONM) reported a 67% year-on-year drop in net profit for the second quarter as cost increases and lower volume offset higher prices.

Net profit for the quarter ended June 30, 2024 (2QFY2024) was RM13.25 million compared to RM40.01 million in the previous year's corresponding quarter, Petron's bourse filing on Thursday showed. Revenue inched up 5.9% to RM4.29 billion from RM4.05 billion in 2QFY2023.

Looking ahead, Petron said that oil price volatility is expected to continue for the rest of the year with escalating tensions in the Middle East, the US interest rate cuts, easing global inflation and softening demand that raises the prospect of a supply glut.

Brent, the benchmark for crude oil, climbed to US$90 (RM387.99) per barrel in April amid geopolitical tensions in the Middle East before dropping to US$83 in June on demand concerns from prolonged high inflation and high interest rates.

Refining margins, meanwhile, have been under pressure as demand cooled while crude premium costs have risen from supply disruptions.

On the domestic front, Petron said the improvement in tourist arrivals to Malaysia, better employment and income prospects, as well as continued progress in multi-year projects across private and public sectors, would support consumption and investment activities.

"Petron remains steadfast in pursuing long-term growth through investments in retail network expansion and enhancing operational efficiencies in the refinery and terminal operations," the company added.

Petron’s domestic sales volume in 2QFY2024 grew by 5% to six million barrels from 5.7 million barrels sold in the same quarter last year, supported by continued growth in the retail and aviation sectors.

However, the increase in domestic sales was partly offset by the reduced exports and intercompany sales with lower production from its Port Dickson refinery, which underwent a planned maintenance during the period.

Overall, total sales volume ended at 9.04 million barrels, down 4% when compared with 2QFY2023.

Petron did not declare any dividends for the quarter.

For the first half of the year, the company’s net profit fell 44.2% year-on-year to RM82.95 million from RM148.74 million. Revenue was up 13.6% at RM8.94 billion compared with RM7.87 billion previously.

Shares of Petron were down one sen or 0.23% to close at RM4.42 on Thursday, ahead of the results announcement, giving the company a market capitalisation of RM1.19 billion.