PETRONAS Announces Financial Results
KUALA LUMPUR, Malaysia, June 30 /Xinhua-PRNewswire/ -- PETRONAS announces the following financial results. PETRONAS GROUP RESULTS FOR THE FINANCIAL YEAR ENDED 31st MARCH 2004 (in RM million) Financial Year ended 31 March 2004 +/- 2003 2002 Revenue 97,512 19.7% 81,434 67,181 Profit Before Tax 37,442 39.3% 26,872 24,318 EBITDA 47,754 32.8% 35,967 32,206 Profit After Tax and 23,659 56.6% 15,105 14,569 Minority Interests Total Assets 203,205 14.2% 178,012 144,216 Shareholders' Funds 97,598 24.6% 78,356 64,784 (in US$ million) Revenue 25,664 19.7% 21,433 17,682 Profit Before Tax 9,854 39.3% 7,073 6,400 EBITDA 12,568 32.8% 9,466 8,476 Profit After Tax and 6,227 56.6% 3,976 3,835 Minority Interests Total Assets 53,482 14.2% 46,851 37,956 Shareholders' Funds 25,687 24.6% 20,623 17,050 Average RM/US$ exchange 3.7995 3.7995 3.7995 rate KEY FINANCIAL AND OPERATIONAL RATIOS Financial Year ended 31 March 2004 2003 Return on Revenue (PBT/Net 38.4% 33% Revenue) Return on Assets (PBT/Total 18.4% 15.1% Assets) Return on Capital Employed 29.8% 26.7% Debt / Assets Ratio 0.28x 0.33x Reserves Replacement Ratio 2.6x 2.1x OVERVIEW PETRONAS Group of Companies turned in another record performance for the Financial Year ended 31 March 2004 as it continued to deliver sustained growth and improvements both financially and operationally on the back of strong crude oil, petroleum products, Liquefied Natural Gas (LNG) and petrochemical prices. The year under review saw the global oil and gas industry continue to be marred with uncertainties primarily due to geopolitical developments in the Middle East that heightened concerns over security of supply. Demand on the other hand was boosted by global economic recovery coupled with active stock building activities by major consuming nations, exerting upward pressure on crude oil prices. Interestingly, the year also saw speculators having a greater influence on crude oil prices as their growing trading positions on oil futures exacerbated the upward pressure on prices. Consequently, the average realized Malaysian Crude Oil (MCO) prices increased by 8% from US$28.60 per barrel to US$30.90 per barrel. The realized weighted average price of our non-MCO also increased in line with the global trend. While higher crude oil prices was a key contributing factor, the integrated and global business portfolio of PETRONAS coupled with operational improvements and continuing cost reduction initiatives enabled the Group to optimize performance in varying market conditions, resulting in a sustained overall performance growth which was comparable and in most cases higher than industry average. Financial Highlights PETRONAS Group of Companies generated a record revenue of RM97.51 billion for the financial year ended 31 March 2004, a growth of 20% over RM81.43 billion recorded in the previous year - a respectable growth rate which is amongst the highest in the industry. Group profit before tax grew by an impressive rate of 40% to RM37.44 billion, resulting in a 38.4% annual return on revenue (profit before tax over revenue) compared to an average of below 15% amongst the super majors. The Group's Return on Capital Employed for the year stood at a commendable 29.8%. The Group's balance sheet continued to strengthen with total assets growing from RM178.01 billion to RM203.21 billion, an increase of 14%. Shareholders' funds increased 25% from RM78.36 billion to RM97.60 billion. Cash and fund investment balance however declined to RM53.79 billion from RM55.38 billion primarily due to the utilization of funds for assets acquisition particularly the producing West Delta Deep Marine (WDDM) asset and Egyptian LNG project in Egypt. Group borrowings decreased to RM57.73 billion from RM58.09 billion mainly due to the repayment of the US Dollar Note of US$500 million. The Group's total debt over assets ratio improved to 28.4%, within the group policy of keeping debt level below 30% of total assets. REVIEW OF RESULTS Buoyed by strong demand driven by global economic recovery and China's growth in energy demand, PETRONAS recorded higher sales volume for all products, namely crude oil and condensates, petroleum products, LNG and petrochemicals. Sales volume for domestic sales gas, however, recorded a marginal decline due to the domestic power sector's reduced dependency on gas in favor of coal as a fuel source. 11% growth in crude oil gross sales volume Overall crude oil gross sales volume increased to 420.3 million barrels compared to 378.8 million barrels in 2003, generating gross revenue of RM44.26 billion, of which MCO contributed 57.8%. 11% growth in petroleum products gross sales volume Group gross sales volume of petroleum products grew from 342.5 million barrels in 2003 to 381.3 million barrels, mainly from increasing trading activities. Higher realized prices of petroleum products, especially for gasoline and naphtha, and their higher sales volumes, contributed to the rise in total revenue of RM 52.09 billion. Petroleum products maintained their position as the largest revenue contributor to the Group. 21% growth in the volume of LNG export LNG continued to be the third largest revenue earner for the Group, generating RM16.82 billion representing an increase of 29% from the previous year due to higher export volume of 18.4 million metric tonnes and higher averaged prices realized. 9% growth in petrochemical products sales volume Petrochemicals continue to register strong growth with gross sales volume increasing by 9%. Coupled with the overall higher petrochemical prices, gross revenue from petrochemicals grew by 32.5% to RM12.22 billion from RM9.23 billion before. 24% growth in exports and international revenue Exports and international operations generated RM75.90 billion in revenue, representing 77.8% of Group revenue and earned valuable foreign exchange revenue for the nation. Of this, exports amounted to RM41.75 billion while international revenue amounted to RM34.15 billion. Revenue from international operations increased by almost RM10 billion from RM24.97 billion in 2003, representing 35% of the Group's total revenue. 13% revenue growth from value adding activities Value adding and enhancement remains a primary objective throughout the Group's activities. This year, manufacturing revenue accounted for 59% or RM57.52 billion of net revenue - an increase of about RM7 billion. Manufacturing revenue consists primarily of revenue earned from refining, LNG and petrochemicals productions. The development of the Kertih and Gebeng Integrated Petrochemical Complexes together with its supporting infrastructure was in line with the Second Industrial Master Plan. Apart from adding value to our oil and gas chain, PETRONAS was able to attract the major petrochemical companies to invest in Malaysia, thereby attracting foreign direct investments of about RM10.5 billion. Combined with the expansion of the PETRONAS LNG Complex, FDI was further boosted to about RM13 billion. RM177.21 billion gross revenue Overall, the PETRONAS Group generated gross revenue of RM177.21 billion, a significant increase of RM30.04 billion from the previous year, generating substantial economic activities and benefits to the nation. UPSTREAM PETRONAS' exploration and production business continue to chart commendable growth and expansion both at home and abroad during the year as the Group pursued its upstream strategy to maximize value creation and growth to the domestic resources while at the same time capitalizing on select potential opportunities overseas. Domestic Exploration & Production (E&P) Highlights - Malaysia's crude oil and condensates reserves grew by 6.6% with reserves replacement ratio of 2.5 times. - Total number of PSCs in operation in Malaysia increased to 49, the highest in history. The PSC contractors invested RM10.93 billion with most investments channelled into development projects. - Malaysia's production increased by 7%. As at 1st January 2004, Malaysia's crude oil reserves including condensates increased by 6.6% to 4.84 billion barrels from 4.54 billion barrels in 2003 as a result of new discoveries following continued investments in the nation's upstream sector. Natural gas reserves however, declined to 87.0 trillion standard cubic feet (tscf) from 89.0 tscf but remained three times the size of crude oil and condensates reserves. At the current rate of production, Malaysia's oil reserves is expected to last another 18 years while the average life for gas reserves is 34 years. Four new production sharing contracts were concluded during the year, bringing the number of PSCs in operation to a record 49, the highest level for the last 29 years. This success favourably reflects the high potential of Malaysia's acreages, especially the deepwater and ultra deepwater blocks, and the attractiveness of the PSC terms. Investments in Malaysia's upstream sector continued to grow during the year. The PSC contractors invested RM10.93 billion in E&P activities compared to RM10.87 billion last year. Of this, RM5.37 billion or 49.1% was for development and production activities, RM1.69 billion or 15.5% for exploration activities and the balance for operations. Approximately half of the total investment was made by PETRONAS' E&P subsidiary, PETRONAS Carigali Sdn Bhd and the balance by foreign PSC contractors. PETRONAS and its PSC contractors will continue to maximize value creation and growth to the domestic resources especially in the deepwater areas. Some 384,247 line-kilometers of seismic data were acquired with 25 exploration wells and 124 development wells drilled during the year. This resulted in 10 new discoveries, adding 375.8 million barrels of crude oil and 2.0 tscf of gas to the nation's hydrocarbon reserves, bringing the reserves replacement ratio for oil to 2.5 times which is higher than the industry average. Seven oil and gas fields were brought into production during the year, increasing the number of producing fields from 63 to 70. Of these, 51 are oil fields. PETRONAS Carigali operates 32 of the 70 producing fields. Malaysia's production of crude oil and condensates during the year increased to 274.6 million barrels (average 750,200 bpd) from 256.4 million barrels (average 702,700 bpd) in the previous period, a growth of 7%, which is higher than the world's average production growth of 4.1%. PETRONAS' share of total production increased slightly to 75.7% from 75% in the previous year. Malaysia's natural gas production for the year increased marginally to 2.20 tscf from 2.13 tscf last year. After accounting for gas re-injection, gas used in operations and flaring, a total of 1.81 tscf was sold as natural and processed gas and LNG. A higher volume of the gas produced during the year was utilized for value adding activities, including the manufacturing of petrochemicals. PETRONAS' share increased to 72.5% from 71.2% the previous year. Combined, PETRONAS' overall share of total domestic oil and gas production amounted to 426.9 million barrels of oil equivalent (boe), representing 74.0% of the nation's total oil and gas production. International Exploration & Production Highlights - Overseas reserves grew by 32% through new discoveries and acquisition. - Established interests in 57 ventures in 25 countries. Operator in 25 of the ventures Driven by its strategy to pursue growth through exploration and reserves acquisition in the international E&P arena, the Group continued to make headway with the acquisition of interest in a producing block, the signing of four new PSCs and two reconnaissance contracts, extending PETRONAS' portfolio of global upstream ventures to 57 in 25 countries. The growth was a reflection of the confidence shown by an increasing number of countries in the capabilities of the Group and the recognition accorded to PETRONAS as a serious global player. Active E&P activities globally enabled PETRONAS to record an increase of 1.53 billion boe of reserves from 4.76 billion boe to 6.29 billion boe, an impressive 32.1% growth. This addition was derived mainly through the acquisition of interest in the WDDM block in Egypt and several successful discoveries in Sudan. PETRONAS achieved a commendable Reserves Replenishment Ratio of 2.6 times for its domestic and international reserves combined. The international reserves account for 25% of PETRONAS' total reserves compared to about 20% in the previous year. Currently, PETRONAS' international reserves are 36% oil and 64% gas. Moving forward, PETRONAS will continue to seek a balanced portfolio of its oil and gas reserves. PETRONAS' share of international oil and gas production grew by 42.7% to 344,000 boe per day as a result of higher production from Sudan, Vietnam, Myanmar and Indonesia as well as maiden production contribution from Chad and Egypt. Overseas' production during the year account for 22.8% of PETRONAS' total production. The increase in both international reserves and production is a clear signal of the Group's increasing success in the global upstream sector. In Egypt, the WDDM concession acquired during the year produced an average of 377.4 mmscfd of gas that was supplied to the growing Egyptian domestic gas market. Development work is progressing to increase the production from the WDDM concession to supply the Egyptian LNG project, with the first train due to come on stream in 2005. The one billion barrels Chad-Cameroon Integrated Pipeline Project was brought on stream nine months ahead of schedule in July 2003 with initial average production of 190,000 bpd and is expected to rise to 225,000 bpd by July 2004. The successful commencement of production from the project has brought Chad into the league of world oil exporting nations. DOWNSTREAM The impressive growth in PETRONAS' E&P business both at home and abroad was complemented by an equally commendable performance in the downstream sector as efforts to promote further integration and enhance value continued to yield greater benefit. Oil Business Highlights - Revenue growth of 16.7%. - Expanded MCO market beyond Asia - PETRONAS Dagangan Berhad maintained leading position as largest supplier of petroleum products in Malaysia with 39% market share - All refineries operated above capacity The Group's Oil Business sector recorded a satisfactory performance during the year with higher net revenue of RM55.07 billion from sales of crude oil and petroleum products (crude oil: RM22.21 billion; petroleum products: RM32.86 billion). This 16.7% growth in revenue was recorded on the back of increased production and trading volume as well as higher crude oil and petroleum product prices. Crude Oil PETRONAS exported 125.7 million barrels of its share of MCO, processed 81.9 million barrels at its refineries in Melaka and Terengganu and sold the balance to other domestic refineries. While in the previous year, 97% of PETRONAS' share of MCO was sold in Asia's crude oil market, in the current year PETRONAS succeeded in expanding its MCO export beyond Asia, with 17% of the MCO delivered to Australia, New Zealand and the USA. Crude oil from our international production was sold to the USA, Europe and Asia. Petroleum Products In the domestic petroleum products sector, PETRONAS, through its subsidiary PETRONAS Dagangan Bhd successfully maintained its leading position as the largest supplier of petroleum products in the country, with 39% market share. A total volume of 68.9 million barrels of petroleum products, LPG and lubricant was sold compared to 66.7 million barrels during the previous year. A total of 48 new service stations were brought into operations during the year, increasing the total number of PETRONAS service stations to 683 nationwide. Subsidiary Engen Limited of South Africa that operates more than 1,250 service stations in Southern Africa defended its leadership position with a market share of 26%. Engen's total sales volume increased to 52.3 million barrels, compared to 51.2 million barrels in 2003. Refining PETRONAS successfully took advantage of the high refining margins by maximizing its refineries' utilization where all its refineries were operated above their capacity levels during the year. In total, PETRONAS' total net refining capacity has increased from 340,500 bpd to 356,500 bpd following a de-bottlenecking exercise at Engen Refinery in Durban, South Africa. Gas Business Highlights - Acquisition of interests in the Egyptian LNG project, the LNG receiving terminal in Milford Haven and the conclusion of shareholders agreement for Pars LNG in Iran set to transform PETRONAS into a truly global LNG player. - The PETRONAS LNG Complex in Bintulu, Sarawak became the world's largest LNG producer at a single location with 23 million tonnes per annum capacity following full operation of MLNG Tiga. - Operationalization of ALTCO LNG The Group's gas business continued to make further headway by strengthening its position in the LNG business following the acquisition of interests in the Egyptian LNG project, the LNG receiving terminal in Milford Haven, Wales and the conclusion of shareholders agreement to develop an 8 million tonnes per annum LNG plant in Iran during the year. These developments will transform PETRONAS into a truly global LNG player, boosting its leading position as the world's largest LNG producer from a single location and the world's largest owner of LNG production capacity. During the year, LNG generated a revenue of RM16.82 billion, an increase of RM3.79 billion or 29% from last year on the back of higher volume sold and stronger LNG prices. Japan continued to be Malaysia's largest LNG customer, taking up 66.2% of the total LNG exported. This is followed by South Korea with 21.3% and Taiwan 11.5%. In terms of market share, Malaysia holds about 49% of Taiwan's LNG market, 25% of Japan's, 20% of South Korea's. Malaysia' LNG production capacity increased to 23 million tonnes per annum with the coming on stream of MLNG Tiga's second train in October 2003, effectively turning the PETRONAS LNG Complex in Bintulu, Sarawak into the world's largest LNG producer from a single location. Now with eight liquefaction trains fully operational, the complex has effectively enhanced the operational flexibility of PETRONAS' LNG production. The first train of the Egyptian LNG project with 3.6 million tonnes per annum capacity is scheduled to come onstream in 2005. The entire LNG output from the first train has been sold to Gaz de France under a 20-year contract. The second train, also with 3.6 million tonnes per annum capacity, is expected to come onstream in 2006 and the entire output from the second train has been contracted to BG Gas Marketing, a subsidiary of BG Group. The year also saw the operationalization of PETRONAS' wholly owned subsidiary, ASEAN LNG Trading Company (ALTCO) in July 2003 to tap on the growing global trend towards LNG trading. ALTCO successfully transported its maiden LNG cargo in August 2003 with the purchase of one cargo from the Middle East for sale into Asia. ALTCO also signed an agreement with MLNG Tiga and BG LNG Services in February 2004 for the purchase, transportation and sale of 17 LNG cargoes throughout 2004/05 from the PETRONAS Bintulu Complex to Lake Charles receiving terminal in Louisiana, USA. Sales Gas Meanwhile, in Peninsular Malaysia, sales gas volume decreased by 3.2% to 1,789 mmscfd due to the reduction of dependency on gas by the power sector. However, the non-power sector's sales gas consumption rose by 12.9% to 506 mmscfd, primarily due to higher off-take from the industrial sector. Petrochemical Business Highlights - Revenue growth of 36.5%. - Gas-based feedstock and integrated nature of operation proved to be more efficient, competitive and profitable against volatile nature of the industry. The petrochemical business sector registered strong growth in performance this year with sales revenue increasing by 36.5% from RM5.82 billion to RM7.95 billion, primarily due to increases both in realized product prices and sales volumes. While the last few years proved to be difficult, the highly volatile petrochemical industry saw a reversal in fortune this year. Strong regional demand especially from China coupled with a tight demand-supply balance due in part to export constraints from the Middle East led to the consolidation and subsequently, upturn in petrochemical markets and prices. Particularly noteworthy was the fact that while most petrochemical businesses have experienced lower or flat margins during the year due high feedstock costs in line with high crude oil prices, the Group's petrochemical business had enjoyed healthier margins. This is primarily due the fact that the Group's petrochemical business is largely gas-based rather than naphtha- based, therefore less vulnerable to the impact of higher crude oil prices. In addition, the integrated nature of the Group's petrochemical plants where feedstock supply is derived from within the system provided an additional shield against fluctuating feedstock costs. In total, the Group sold 6.1 million tonnes of petrochemical products during the financial year compared to 5.5 million tonnes in the previous year. Both export and domestic petrochemical sales grew strongly in line with demand growth. Fuelled by demand both external and within the Group, production levels of the Group's petrochemical plants increased 9.3% to 10.2 million tonnes for the year. The higher level of production was made possible by better operational performances where most of the Group's petrochemical plants achieved availability and utilization rates of above 90% during the year. The improved performance bodes well for the Group's strategy for the petrochemical business sector to achieve and sustain operational excellence. Even though the petrochemical business is not a major revenue contributor to the Group, it continues to be an important business sector in that it significantly adds value to the Group's oil and gas value chain. The general view is that the petrochemical industry is currently riding on the crest of its current cycle and the outlook is favorable. The upswing trend both in the global and domestic economies is expected to carry the upturn in the petrochemical markets for at least the short term. Much has been said about future challenges in the petrochemical industries including the volatile nature of prices and markets, as well as the potential threat of new suppliers from the Middle East. The Group, however, strongly believes that its focus on achieving operational excellence through enhanced productivity and margin improvements through cost containment and efficiency efforts will place it in good stead to face these challenges. Logistics and Maritime Business Highlights - Strategic acquisition of AET contributed RM1.3 billion to revenue and RM500 million to PBT of MISC, auguring well for the realisation of MISC's aspiration to be the premier energy based transport provider in the world. - MSE became a subsidiary of MISC and will be transformed into the company's heavy engineering arm. Spearheaded by subsidiary MISC, the Group's logistics and maritime business generated total revenue of RM8.46 billion for the financial year ended 31 March 2004, a growth of RM2.28 billion or 37.0% year-on-year. Improved freight rates and MISC's acquisition of American Eagle Tankers (AET) in July 2003 were the main contributors to the improved revenue. During the financial year, MISC took delivery of another two LNG tankers, expanding its LNG carrier fleet to 17 tankers. A further six tankers are on order, which will bring the total number of tankers to 23, strengthening MISC's position as the world's largest owner and operator of LNG carrier fleet and in line with its focus on energy, particularly LNG shipping as a core business sector. A milestone was set during the year when one of MISC's vessels, on its return voyage from Lake Charles, USA, back-hauled a cargo from Oman to Japan. The back-hauling is illustrative of MISC's continuous efforts in optimizing operational efficiency, capitalizing on its position as the world's largest owner and operator of LNG vessels. MISC has also made headway in securing third party charters for its LNG vessels when it managed to strike an agreement with J&S Cheniere for the charter of one of its LNG vessels during the financial year. The acquisition of AET has provided MISC with a firm foothold in the Atlantic petroleum-shipping sector, at the same time transforming MISC into the second largest Aframax petroleum tanker operator in the world with 39 Aframax tankers. The year also saw MISC successfully reversing its previous year losses on the bulk, liner and chemical businesses. Although higher freight rates have contributed in part to the improved results for these businesses, MISC's rationalization efforts in terms of shifting between spot versus long-term business and restructuring its loss-making services have also been key success factors in turning around the businesses. During the year, MISC acquired an additional 22% interest in Malaysia Shipyard Engineering (MSE), making it a 65% subsidiary. The company will be MISC's heavy engineering arm focussing on the energy business. MISC also took delivery of its first Floating Production Storage and Offloading (FPSO) tanker in March 2004 that is currently on long-term charter to PETRONAS Carigali. The FPSO / Floating Storage Offloading market will provide another new area of business for the company to diversify its earnings base. Looking ahead, MISC endeavors to be the preferred provider of world-class maritime transportation and logistic services with energy as its target core- area. Presently, over 90% of MISC's revenue is already derived from the energy sector, in line with its role within the Group's integrated structure. CLOSING The financial year ended 31 March 2004 proved to be an exceptionally successful year for PETRONAS as the Group delivered its best financial performance ever. This has put it on par with other major industry players, most of whom are much larger in size and scale of operations. PETRONAS believes that the firm foundation built on its broad strategy to integrate, add value and globalise its businesses over the years is producing results. The superior performance is a fitting achievement for the employees of PETRONAS, both Malaysians and non-Malaysians, as the Company celebrates its 30th anniversary on 17 August this year. Indeed, the success was made possible by the talent and commitment of the men and women of the PETRONAS Group, who embraced the challenge and delivered results, and more importantly did so the right way, by acting with integrity and high ethical standards. Moving forward, we will continue to be guided by our Shared Values, be anchored in our Mission and Corporate Vision "To Be A Leading Oil and Gas Multinational of Choice," renew our commitment and resolve in the implementation, adaptation and proactive execution of our plans. We have embarked on the next phase of our journey - our Corporate Agenda - to significantly raise performance across all our businesses and at the same time create true distinctiveness to achieve sustainable value creation in our growth. Our strategic plan is to transform PETRONAS into a high-performing organisation known for its resilience and distinctiveness. This is our aspiration in our Corporate Agenda. 2004 marks the 30th anniversary of the incorporation of Malaysia's national oil company that has grown to become a fully integrated oil and gas multinational with significant global presence. For the past 30 years, we have taken pride in knowing that we have been able to play an effective role as a catalyst for nation building and contribute towards economic development and help improve the standard of living around the world. While this anniversary causes us to reflect upon our past accomplishments and successes, it also reminds us of our responsibility to build for the next 30 years. Issued by Media Relations & Information Department Legal and Corporate Affairs Division PETRONAS More information on PETRONAS' FY2003/04 results is available on www.petronas.com Contact: Mr. Azman Ibrahim PETRONAS Tel: +603-2051-2140
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