Shell posts strong second quarter

Shell bounced back from a weak year last year by posting net profit of RM322.19mil.

This was almost four times the first quarter’s net profit of RM84.23mil.

Last year, it posted a net loss of RM28mil a year earlier.

The better Q2 performance came on the back of a 24.1% drop in revenue to RM2.97bil due to lower product prices.

In the first six months of the year , its net profit totalled RM406.42mil compared with a loss of RM72.09mil in last year’s corresponding period.

In a statement to Bursa Malaysia, the petroleum product manufacturer attributed the first six months’ better bottom line to higher refining margins coupled with stockholding gains of RM101mil versus a stockholding loss of RM26mil in the same period last year.

While revenue was lower by 31% year-on-year at RM5.45bil in the first half-year, Shell’s refinery processed 19.6 million barrels of crude oil and sold 21.3 million barrels of products, an increase of 3% from the corresponding period in 2014.

On the prospects for the year, Shell said that the improved profitability so far was due to stockholding gains and also stronger refining margins as a result of weak crude prices and short-term product availability.

“The outlook for refining margins is uncertain for the remaining months of 2015,” it said.

It said this was because margins would be influenced by international supply and demand for petroleum products, as well as seasonal and cyclical factors.

“A major maintenance turnaround in compliance to local regulatory requirement is planned to commence in mid-August and scheduled to require a period of seven weeks to complete.

There will be no production during this period which will affect profitability.”

Shell shares shed 3 sen to close at RM4.87 yesterday.

Shell Refining Company managing director Amir Bakar said in a press statement that his team had continued to focus on strong operational performance and product quality.

Hence, he added that the company was poised to capitalise on the current business environment.

“We will continue to focus on delivering this year’s business goals as well as our health, safety, and environment performance; especially with the upcoming major maintenance turnaround event,” he said.

In 2014 the company incurred a net loss of RM1.19bil on revenue of RM14.26bil, due to stockholding losses of RM625.1mil (the result of falling crude prices), impairment losses of RM460.9mil, and operational losses of RM102.6mil.