KUALA LUMPUR • Malaysia's state- owned energy firm Petronas said yesterday it will raise its dividend payment to the government by another RM3 billion (S$955 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 kept a cautious outlook, saying its overall year-end performance is expected to be "fair" as oil price volatility continues.
The firm's second-quarter profit rose to RM7.06 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, at above US$52 a barrel now, is less than half what it was in mid-2014. However, lower operating expenses, job cuts and project deferments helped the firm 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.
Correction note: This story has been edited to correct the currency conversion of RM3 billion to Singapore dollars. We are sorry for the error.