KUALA LUMPUR: Petroliam Nasional Bhd's (Petronas) net profit plunged 68 per cent to RM4.5 billion in the first quarter ended March 31, 2020 from RM14.2 billion a year ago.
This was primarily due to net impairment on assets and lower revenue recorded, Petronas said in a statement today.
Its revenue was 4.0 per cent lower at RM59.6 billion from RM62 billion, mainly attributable to the impact of lower average realised prices recorded for liquefied natural gas (LNG), petroleum products and crude oil and condensates.
Petronas president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said as the industry outlook continued to be marred by prolonged volatility, the group remained focused in strengthening its resilience to weather the downward cycle while not losing sight of its long-term plans to ensure its future sustainability.
"We anticipate a very challenging outlook for the rest of 2020, with economic activities expected to only gradually recover in the second half of the year," Wan Zulkiflee added.
Industry players including Petronas will be adversely impacted if the current market situation persists and oil prices remain low.
"Against this challenging backdrop, our focus is to preserve cash and maintain our liquidity, continue our cost compression efforts and respond to changing market conditions with pace.
"We will also continue to uphold the health and safety of our people and communities where we operate as well as contribute towards efforts in overcoming the global pandemic," he said.
In the longer term, Petronas remains committed to its three-pronged growth strategy to maximise cash generators, expand core business, and step out to future proof the organisation and ensure long-term sustainability, Wan Zulkiflee added.
Petronas' total assets in Q1 increased to RM630.0 billion as at March 31 compared to RM622.4 billion recorded as at December 31 last year.
This was mainly due to higher capital expenditure and the effect of the weakening ringgit against the US dollar exchange rate.
As at March 31 this year, its shareholders' equity decreased to RM374.1 billion from RM389.1 billion as at December 31 last year.
This was mainly contributed by the final dividend declared for the financial year ended December 31, 2019.
Petronas said it was operating in unprecedented market conditions driven by a combination of severe demand destruction due to Covid-19 and global oil market glut.
"In mitigating the negative impact on its profitability and liquidity, the group is taking steps to optimise its planned international capital investments and operating expenditures.
"While the group continues to invest domestically, it anticipates that there will be constraints in the supply chain as a result of the pandemic. The board expects the overall financial year performance to be significantly affected by these factors," it added.