Petronas Dagangan Bhd (PetDag) would be allocating RM200mil in capital expenditure to nurture its recent downstream acquisitions, in a bid to maintain its growth momentum.
“We don’t think the capex, which involves the construction of warehouses and liquefied petroleum gas (LPG) terminals, is significant as it is within PetDag’s capacity.
“We are already looking at ways to fund this capex,” chair Datuk Wan Zulkiflee Wan Ariffin told reporters after the company’s annual general meeting.
He said the company needs time to nurture the downstream acquisitions to reach critical mass, before it can see significant contribution to its bottomline.
“We are anticipating this to be a mid term to long term investment before it becomes substantial.
“If you look at the current investment, it is only about 4 percent of the total assets of the company,” Zulkiflee said, adding that it would need about four to five years to achieve its target.
Earlier this month, the company said it would be buying six downstream companies belonging to its parent, Petronas Nasional Bhd, in the Philippines, Vietnam, Thailand and Malaysia for $62mil (RM197.3mil).
“The Malaysian market has become kind of saturated for PetDag, and I think what we are doing is to set the foundation for the next phase of growth for PetDag.
“The companies we have acquired are companies within our core competencies like LPG, lubricant and aviation,” Zulkiflee said.
With the acquisition, PetDag would be extending its reach further into the Asean region, and would be focusing on its post acquisition integration efforts to create more value within PetDag’s group of companies.
“I think we would focus a lot on what could be done in the next few months, post acquisition.
“Detailed plans are already in place and also people have been assigned to what needs to be done. At the moment, we are just focusing on the six companies that we have acquired,” he said.
Zulkiflee also said the company would continue to look for opportunities in the Asean region while focusing on its post acquisition efforts.
For its financial year ended December 31, 2011, the retail arm of Petronas recorded a net profit of RM898.9mil over a revenue of RM22.2bil.
The company currently operates more than 970 Petronas stations nationwide commanding about 31 percent market share of the local retail market.
The LPG, petrol, kerosene and diesel marketer also commands about 59.9 percent of the commercial market, 55 percent of the LPG market and 24 percent of the local lubricant business.