Petronas Dagangan to focus on retail, bitumen segments

KUALA LUMPUR: Petronas Dagangan Berhad (PDB) remains focused on expanding its retail business this year despite expecting weak customer sentiment in 2015 to continue this year.
“If you look at the customer sentiment for 2015, they’ve been very cautious with their spending due to the rising cost of living, so we expect to see weak consumer spending patterns this year as well,” group chairman Md Arif Mahmood told a press conference after the company’s AGM yesterday.
With a retail network of over 1,000 Petronas stations nationwide, the company has expanded to include more than 70 retail partners and has allocated around RM400 million to open up to 15 new stations and refurbish existing stations.
The company is focusing on improving experience at the pump, increasing offerings at stores, improving facilities at stations and ensuring cleanliness and safety.
In FY15, the retail business contributed close to 50% of the company’s overall margin.
On its outlook for 2016, Md Arif said the group aims to sustain and grow profitability with their strong efforts to manage inventories, costs as well as improve network and supply efficiency.
Moving forward, CEO Mohd Ibrahimnuddin Mohd Yunus said the strategy which was employed in 2015 is still relevant this year as the volatility of the market is similar, in terms of the price of crude oil and product prices.
“Last year, we cut back the inventory holding period from nine days to five days and that itself has freed up a lot of working capital, we have also done more automation to reduce costs and increase efficiency and production capacity,” he noted.
Ibrahimnuddin added that although the group is concentrating on retail business this year, commercial business remains a core focus as it is a dominant driver, contributing about 40% of PDB’s net profit in FY15.
The group is expecting its bitumen segment to be a bigger profit contributor this year and hopes to increase its sales volume by 3%, taking advantage of several major infrastructure projects in Malaysia.
Bitumen contributed quite significantly last year on the back of high supply of bitumen in the industry for 2015.
“Currently, bitumen contributes about 15% in profit to the commercial business,” Ibrahimnuddin said.
PDB registered a profit before tax of RM1.1 billion for FY15, an increase of 53% from 2014.