KUALA LUMPUR (Nikkei Markets) -- Petronas Dagangan, the retailing arm of Malaysia's national oil-and-gas company Petroliam Nasional, plans to trim capital expenditure and spend up to 300 million ringgit ($76.6 million) this year, its chief executive said Wednesday.
This year, the company will focus on refurbishing and upgrading some existing stations, Mohd Ibrahimnuddin Yunus told reporters after annual shareholders' meeting. The company aims to open 10-to-15 fuel stations this year, he said.
"Going forward, we will continue to focus and grow volume across all business segments by defending our current leadership position," he said. "We want to grow fuel and non-fuel businesses."
Petronas Dagangan, which operates Malaysia's largest network of over 1,000 gasoline stations, budgeted capital spending of 400 million ringgit last year. The company also sells aviation fuel and other hydrocarbon products such as lubricants and liquefied petroleum gas in Malaysia.
It is one of Petronas' listed companies that also include petrochemicals firm Petronas Chemicals Group and natural gas supplier Petronas Gas. Petronas also owns stakes in shipping company MISC and shipbuilder Malaysia Marine and Heavy Engineering.
While recent profits surged as crude oil recovered, Petronas Dagangan is now grappling with weak sales, poor consumer sentiment, and a general shift in transport choice following a massive government push to develop rail networks.
Apart from muted sales volume growth, analysts said the company's retail business also faces intense competition in a saturated market of 32 million people.
"We expect retail volume to stay flattish due to stagnant auto total industry volume, improved public transport, growing popularity of e-hailing services and improvement in fuel efficiency of cars," said Hong Leong Investment Bank's analyst Yip Kah Ming.
On its part, Petronas Dagangan will focus on internal improvements and product offerings, such as expanding Euro 5 diesel availability, Ibrahimnuddin said. The company has also budgeted capital for multi dispensers and maintenance of depots and terminals, he said.
The company's distribution network includes 38 terminals, 17 fuel terminals, 13 aviation terminals, 12 bunkering facilities and eight liquefied petroleum gas terminals, according to its annual report.
Net profit surged 68% to 1.59 billion ringgit on revenue of 26.74 billion ringgit last year as average selling prices rose, while total volume fell 1%. About 90% business comes from retail and commercial fuels, while liquefied petroleum gas and lubricants account for 10% of its volume.
Shares of Petronas Dagangan ended unchanged at 27 ringgit on Wednesday, while the benchmark FTSE Bursa Malaysia KLCI closed 0.7% lower.