Higher prices challenge PDB margins

Petronas Dagangan Bhd (PDB) anticipates facing a challenging and difficult year in 2006-2007, mainly due to higher fuel prices. The company’s operating margins has been on a downtrend, as it is absorbing a part of the rising fuel costs. However, PDB is optimistic of sustaining its performance during 2006-2007 on par with that of fiscal year ending March 2006, when it recorded a pre-tax profit of RM726 million (US$197.23 million) and a 33% hike in revenues at RM16.56 billion (US$4.50 billion). In order to counter higher fuel prices, the company is undertaking efforts to improve sales, expand its retail network and enhance efficiency in its operations. It is also planning to expand its retail business, petroleum products retailing (commercial division), liquid petroleum gas and lubricant business. The retailing segment will account for 43% of total sales and 58% of the companys gross margins. PDB also proposes to increase its existing 790 stations by 70 by the end of 2006, with an investment of between RM5-10 million (US$1.36-2.72) per outlet, to boost PDBs current market share of 40%. (July 28, 2006)