PTT upbeat on this year's profit outlook

PTT upbeat on this year's profit outlook

Even though crude oil prices have tumbled more than 50% since June to below US$50 a barrel with no end in sight, PTT Plc expects its 2015 net profit will remain the same as last year.

The optimism comes from completely writing off its oil inventory loss last year so it will not carry forward to this year, as well as a one-off profit from the planned sale of Bangchak Petroleum (BCP), said PTT chief operating officer Surong Bulakul.

He said the plan to sell its 27.21% stake in BCP was expected to generate an extraordinary income of around 10 billion baht. The company is negotiating with three to four potential buyers.

PTT also expects its shrinking income from lower oil prices to be offset by the Energy Ministry's policy to float the natural gas retail price, leading to higher gas prices.

Mr Surong acknowledged the performance of two businesses, PTT Exploration and Production (PTTEP) and its oil refineries, will be adversely affected by nosediving oil prices. 

PTT is continuing to diversify into other businesses related to energy to alleviate risk from oil price fluctuation, still its major source of income.

"Our core revenue is still generated from PTTEP, PTT Global Chemical, natural gas businesses and oil refinery," said Mr Surong. "Real demand for energy has been shrinking in line with eroding consumer purchasing power in large economies such as the US, China and Japan."

He said given Thailand's geographical advantage as the centre of Asean, PTT was on course to aggressively expand in the region, especially in the Greater Mekong Subregion, which is the fastest-growing region in the area. This year it will focus on power plants and the AEC market.

Mr Surong said the short-term oil price was difficult to predict. Below $50 a barrel would be the lowest in five years and below the production cost of many oil producers, while the supply glut has reached 1 million barrels per day.

War in the Middle East, unrest in Eastern Europe and the economic crisis in Russia will also affect global oil prices, he said.

PTT typically earned about 100 billion baht per year in profit until last year, when the unexpected global crude price dip hurt profits. After the subprime crisis, oil prices ranged from $60-80 per barrel, but usually they would be $90-100.

"If the price rebounds to $60-80 a barrel, we may be able to reach 100 billion in profit this year," said Mr Surong.

PTT shares closed yesterday on the SET at 338 baht, down two baht, in trade worth 2.17 billion.

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