Hengyuan Refining Company Records Outstanding 3rd Quarter Results

BackNov 30, 2017

Hengyuan Refining Company Records Outstanding 3rd Quarter Results

Refinery’s strong performance fueled by improved margins and enhanced plant efficiencies

PORT DICKSON,30 November 2017 -- Hengyuan Refining Company Berhad (formerly known as Shell Refining Company (Federation of Malaya) Berhad) (“HRC” or “the Company”) is sustaining its financial performance through improved refining margins supported by production reliability. The Company today announced that it had registered a Profit After Tax (“PAT”) of RM361.8 million for its 3rd quarter ended 30 September 2017. This marked a significant turnaround when compared with a Loss After Tax of RM80.9 million registered for the corresponding quarter a year ago.

The Company’s surge in profit was mainly due to improved refining margins as well as the gradual recovery of traded crude prices which resulted in a stockholding gain. As a result of the Ringgit strengthening against the US Dollar, foreign currency exchange gains were recorded for Ringgit denominated revenues. In addition, operating expenditure was lower against the corresponding period last year. However, this was offset by a higher depreciation and financing cost incurred during the said period.

HRC’s revenue for the quarter under review was recorded at RM2.9 billion, an increase of 51% when compared to revenue of RM1.9 billion recorded in the corresponding period last year. The notable jump in revenue and refining margins was partly due to higher average prices of market traded refined products caused by production outages resulting from hurricanes in the Gulf of Mexico and a fire incident in a large-scale European refinery during the said period. During this period the Company also achieved additional sales of 0.6 million barrels as a result of improved plant efficiencies.

On a cumulative perspective, the Company’s PAT for the first nine months of its 2017 financial year rose almost 6-fold to RM725.7 million from RM127.5 million a year ago. Market average refining margins for the nine-month period ended 30 September 2017 was approximately USD8 per barrel. Market refining margins for the same period last year averaged below USD4 per barrel.

Revenue for the period was also higher at RM8.5 billion compared to RM5.8 billion last year. This was due to higher average product market prices at $63.50 per barrel, compared to $48.80 per barrel for the corresponding period last year.

Maarten Stals, Managing Director and Executive Director of HRC said, “Clearly HRC’s significantly strengthened performance year to date is a reflection of an improved macroeconomic landscape as well as the positive outcome of our Company’s continued efforts to enhance operational reliability and capture commercial opportunities throughout our value chain.”

“Moving forward, we expect refinery margins to remain challenging. Nevertheless, we are convinced that our focus to further improve operational efficiencies, ensure product quality and leverage on financial risk management tools will be integral towards enabling HRC to optimise margin opportunities and to seize market opportunities,” he added.

“I’m proud of our staff who delivered safely and passionately during this transitional year for HRC. We are currently focused on preparing for the statutory Major Turnaround in 2018, which is expected to take about 2.5 months and on the various other projects approved by the Board of Directors announced earlier in the year. However, we now anticipate a delay in the planned completion of the Euro4M Mogas project due to the longer than expected duration to fabricate the main equipment. We are currently evaluating options to minimise the impact and will provide further information in due course”, Stals concluded.

About Hengyuan Refining Company Berhad

Hengyuan Refining Company Berhad (HRC), formerly known as Shell Refining Company (Federation of Malaya) Berhad (SRC), was incorporated in Malaysia on 19 September 1960. The company was listed on the Main Board of the then Kuala Lumpur Stock Exchange (now known as the Main Market of Bursa Securities) on 29 October 1962.

On 22 December 2016, Malaysia Hengyuan International Limited (MHIL) acquired 51.0% equity stake in SRC from Shell Overseas Holdings Limited for USD66.3 million. MHIL is wholly-owned by Heng Yuan Holdings Limited, which in turn, is a wholly-owned subsidiary of Shandong Hengyuan Petrochemical Company Limited..

Hengyuan Refining Company Berhad manages and operates a refinery in Port Dickson, Negeri Sembilan with licensed production capacity of 156,000-bpd. The refinery is involved in the refining and manufacturing of petroleum products, and provides employment for more than 500 individuals comprising of staff and contractors.

About Shandong Hengyuan Petrochemical Company Limited

Established in 1970, Shandong Hengyuan Petrochemical Company Limited (SHPC) is a state-owned enterprise based in Linyi County, Shandong Province, China. SHPC develops, produces, processes, and markets diesel oil, liquefied gas, propylene, propane, polypropylene, tert-butyl alcohol, oil slurry, asphalt, tert-pentene, ethybenzene, and other petroleum related products.

SHPC has total assets of 4 billion Yuan (approx. USD582.53 million) and employs 1,700 employees. SPHC is one of the Top 100 Leading Enterprises in Shandong and one of the Top 500 Chinese Chemical Enterprises. The Group has garnered multiple accolades over the years and its Chairman and General Manager, Wang Youde, has also received recognition including ‘One of Ten Outstanding Entrepreneurs in Shandong Province’ and ‘Outstanding People Award of National Advancements in Productivity’, amongst others.


This news release is issued on behalf of Hengyuan Refining Company Berhad by Acendus Communications Sdn Bhd. For further information, please call I-Mae at 012 383 5688 or Michael Poh at 012 395 5202.