Petronas Dagangan Bhd (PetDag) expects a better outlook in the second half of the year (2H 2020), following improvement in petroleum product prices, coupled with a slight growth in demand due to the enforcement of the Conditional Movement Control Order (CMCO) which started on May 4, 2020.
Managing director and chief executive officer Azrul Osman Rani said although PetDag is cognisant of the fact that 2020 will be challenging amidst the sharply declining petroleum product prices, as well as challenges from the COVID-19 pandemic, it is gearing up for a rebound when the market normalises.
“Our first quarter results were impacted by these external factors, but we anticipate a better outlook in 2H 2020 as we are already seeing improvement in petroleum product prices and a slight growth in demand now, with the enforcement of the Conditional Movement Control Order (CMCO) relative to the MCO period,” he said in a statement in conjunction with the company’s virtual annual general meeting held.
Moving forward, Azrul said PetDag would reinforce its financial strength for the near term by reducing non-essential spending, whilst continuing to invest in asset integrity and growth projects that are aligned with its long-term strategic priorities.
“This includes adding new stations, accelerating digitalisation and efforts to enhance revenue diversification,” he said
Azrul said currently, PetDag, the largest petrol station operator in the country, is adjusting to the new normal that is reshaping the operating environment and customer behaviour.
“We continue to identify untapped opportunities to expand our growth, such as providing more attractive food offerings at Kedai Mesra.
“We has also enhanced the e-payment Setel application (app), which is now recognised as the only refueling app in the market that helps minimise physical touch points – a clear advantage in this period of social distancing to minimise the spread of COVID-19,” he said.
Azrul added that underpinning the company’s growth strategy is a solid foundation of operational efficiency, sound risk mitigation strategies, prudent cash management and a robust strategic investment approach to ensure long-term business sustainability.
“We are optimistic that with our strong fundamentals and strategic growth plans, we will be able to ride this wave and emerge stronger,” he said.
PetDag slipped into the red in the first quarter ended March 31, 2020 (Q1 2020), registering a net loss of RM29.42 million from a net profit of RM291.20 million in the same period a year ago.
In a bourse filing on May 18, 2020, the company attributed the quarterly loss to lower gross profit following a sharp decline in Mean of Platts Singapore (MOPS) price trends, lower sales volume towards the end of the quarter, and higher operating expenses attributable to professional services cost and depreciation cost. – BERNAMA