PetGas' 1Q Net Profit Rises 7.7% On Lower Input Costs

Petronas Gas Bhd (KL:PETGAS), which operates Malaysia’s largest pipeline network, said on Wednesday that its net profit for the first quarter ended March 31, 2024 (1QFY2024) rose 7.7% from a year earlier, as lower input prices offset a decline in revenue.

Quarterly net profit stood at RM456.65 million, versus RM424.18 million for 1QFY2023, PetGas said in an exchange filing. Revenue, meanwhile, slipped 3.4% year-on-year to RM1.62 billion from RM1.68 billion.

The group declared a first interim dividend of 16 sen per share, equivalent to a payout of RM316.6 million, payable on June 27.

PetGas’ utilities segment — a producer of electricity, steam and industrial gases — dragged down the group's top line, with the segment registering a 15.3% decline in revenue to RM515.28 million, from RM608.36 million previously, mainly due to lower product prices, in line with lower gas prices and lower electricity tariffs. 

Meanwhile, the gas processing segment saw a 5.4% rise in revenue to RM467.85 million, from RM443.88 million a year ago, on higher reservation charges under new terms of the gas processing agreement (GPA) from Jan 1, 2024. 

Under the third-term GPA with Petronas, the fixed reservation charge has been increased by 5.7% to RM2,688/MMcsfd, from RM2,524/MMcsfd under the second term. 

The gas transportation segment also saw an improved performance, with revenue increasing 3.8% to RM299.48 million, from RM288.43 million previously, as a result of upward tariff adjustment mainly related to changes in internal gas consumption allowed under the Incentive-Based Regulation framework. 

As for PetGas’ regasification segment, revenue remained steady, with a 0.6% rise to RM336.21 million, from RM334.28 million a year earlier. The group noted that both of its regas terminals — in Sungai Udang, Melaka, and Pengerang, Johor — sustained a 100% reliability performance during the quarter. 

Looking at FY2024 as a whole, PetGas expects its performance to 'remain healthy', premised on stable-earning contracts as well as sustained operational performance.

“The new third-term GPA and the approved upward tariff adjustment for the gas transportation segment for changes in internal gas consumption effective from Jan 1, 2024 are anticipated to support the group’s healthy earnings,” it said. 

“The group remains committed to optimising cost efficiencies to minimise the impact of an inflationary operating cost environment,” it added. 

PetGas managing director and CEO Abdul Aziz Othman said the group’s dedication to operational excellence and sustainable growth agenda will continue to underpin the company’s robust and healthy performance.

“PGB’s strong performance in 1QFY2024, despite increased business environment cost amidst elevated Malaysia Reference Price (MRP) and commodity prices, reflects our resilience. We anticipate robust and healthy performance while actively pursuing identified opportunities,” he added. 

PetGas closed two sen or 0.1% lower at RM18.28, valuing the group at RM36.17 billion.