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CONTINUING weak demand for oil products, compounded by exports from new rival refineries saw Singapore Petroleum Company - now a subsidiary of oil giant PetroChina - chalking up a second-quarter net profit of just $43.5 million, a 75.8 per cent drop from the corresponding quarter last year. Revenue in the April-June period of $1.7 billion was also just over half of last year's $3.25 billion.
Earnings per share for Q2 dropped a corresponding 75.8 per cent to 8.45 cents.
The H1N1 virus was another negative for SPC as it caused travel curbs and resulted in weaker jet fuel demand. SPC added that a scheduled maintenance shutdown of a 135,000 barrels per day unit at its refinery resulted in a 13 per cent reduction in Q2 throughput. But this facilitated the tie-in for its new clean diesel plant which has been successfully commissioned.
The weak Q2 performance brought its net profit for the first half down by 64.4 per cent to $99.14 million from $278.75 million in H1 2008, while H1 revenue was $3.15 billion, a 47 per cent drop from last year's $5.96 billion.
SPC is not paying out any interim dividend for H1, unlike last year's 20 cents per share interim payout.
With weak demand and excess supplies in the market, the integrated oil company said that its average refining margin in Q2 fell to US$3 a barrel from US$13 a barrel a year ago. It was also down from the US$4.50 a barrel in Q1.
Under its move to impose more stringent controls during the current downturn, SPC managed to trim its operational expenses down to $13.5 million in Q2 compared with $17.4 million in the same quarter last year. But it said that its forex losses were higher due to the weakening US dollar.
SPC also made a provision of $34.9 million for its Indonesian Sampang development as it assessed that 'its asset carrying value exceeded the estimated recoverable amounts under the current price environment'.
For H1, SPC's average realisation of US$56.08 per barrel was lower than the US$110.56 achieved in H1 2008.
On prospects ahead, SPC said that 'the global economy is beginning to show signs of recovery and demand for refined petroleum products may improve', adding that it will continue to exercise stringent cost controls and that it is financially well-positioned to capitalise on growth opportunities.
An unconditional cash offer by PetroChina - which bought over Keppel Corp's 45.51 per cent stake - for the rest of SPC's shares is currently in progress. As at last Tuesday, the Chinese oil giant owns 53 per cent of SPC.
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