KUALA LUMPUR: Petronas weak results for the first quarter ended March 31, 2015 were within Moody’s Investors Service expectations and have been factored into its A1 Stable ratings.
Moody’s Vice-President and Senior Credit Officer Vikas Halan said the Q1 results could be accommodated within the current rating which was affirmed in March this year.
In a statement released today, Halan said on a full year basis, Moody’s believes that the company’s earnings would decline by around 30 per cent, given the US$55 per barrel (bbl) average Brent crude price assumption for 2015.
Petronas reported a 39 per cent year-on-year decline in net profit to RM11.4 billion in the first quarter which was largely attributable to the 50 per cent decline in the benchmark crude prices.
The impact of low oil prices was partially offset by higher sales volume for crude oil, processed gas trading and liquefied natural gas (LNG), as well as weakening of the ringgit against the US dollar.
Halan, who is also Lead Analyst for Petronas, said the reduction in Petronas’ planned dividend payments of RM26 billion in 2015 from RM29 billion last year is a positive development for the company as it would decrease cash outflow and further improve its financial flexibility in the stressed operating environment.
Moody’s continues to expect the company will maintain its adjusted debt to earnings before interest, taxes, depreciation and amortisation below 1.0x and adjusted debt to book capitalisation below 20 per cent in 2015.
As at March 31, 2015, Petronas has a strong liquidity profile, with cash and cash equivalents, including funds and other investments amounted to RM145 billion compared with total reported debt of RM55 billion.
Looking forward, Moody’s expects Petronas to maintain its strong liquidity position which is providing support to the company’s credit metrics in light of the deterioration in its financial profile. — Bernama