Malaysia's Petronas raises dividend payout to government after profit surges

Petronas is a key contributor to government coffers - last year, its dividends accounted for 7.5 per cent of total government revenue.
Petronas is a key contributor to government coffers - last year, its dividends accounted for 7.5 per cent of total government revenue.PHOTO: AFP

KUALA LUMPUR (REUTERS) - Malaysia's state-owned energy firm Petroliam Nasional Bhd (Petronas) said on Friday (Aug 25) it will raise its dividend payment to the government by another RM3 billion (S$954 million) after reporting that second-quarter profit quadrupled because of higher oil prices and improved margins.

Petronas, Malaysia's only Fortune 500 company, will pay the government RM16 billion this year, up from its earlier commitment of RM13 billion, chief executive officer Wan Zulkiflee Wan Ariffin said at a news conference.

The increase was recently approved by the board due to the company's financial performance, he said.

Still, Petronas maintained a cautious outlook, saying its overall year-end performance is expected to be "fair" as oil price volatility continues.

The energy firm's second-quarter profit rose to RM7.06 billion (S$2.2 billion) from RM1.68 billion in the corresponding quarter last year. Revenue rose to RM51.63 billion from RM46.95 billion.

"Despite higher oil prices compared to a year ago and overall stronger financial and operational performance, the industry remains volatile, and we are tempering our optimism," said Mr Wan Zulkiflee. "We temper our outlook because we are conservative," he said, adding that the softer outlook does not have an impact on the dividend payout to its sole shareholder, the Malaysian government.

Petronas is a key contributor to government coffers - last year, its dividends accounted for 7.5 per cent of total government revenue.

Petronas, like other oil majors, has taken a hit from lower oil prices. Brent crude, currently above US$52 a barrel, is now less than half what it was in mid-2014. However, lower operating expenses, job cuts and project deferments helped the company post a higher 2016 profit.

As oil prices slumped last year, Petronas slashed spending by RM50 billion for the next four years and also lowered the government dividend. The company had paid a RM26 billion dividend in 2015.

"The price of oil today, at around US$50 per barrel, this is the level we must take as the norm," said Mr Wan Zulkiflee.