Petron quits lubricant business to focus on retail fuels
Petron Malaysia Refining & Marketing
Bhd has exited the lubricant business because the challenges of the local
lubricants market would require extra allocation and other resources on the
part of the Petron group.
In an exchange filing last Friday, the company said it will focus on its strong and visible retail fuels marketing business and commercial business including liquefied petroleum gas (LPG), industrial and wholesale fuels and aviation fuels. It also has a strong presence in petroleum refining and supply/distribution, elements within Petron that support its retail and commercial businesses.
The petroleum products maker and distributor said its resources would be more beneficially utilised in fuels marketing and commercial businesses where there is certainty of higher return on investment (ROI). It is estimated that the marketing efforts to introduce a new brand of lubricants in the Malaysian market would not yield immediate returns.
The loss of profit contribution from the sales of a new brand of lubricant to the company’s profitability would not be materialised.
Petron also announced that it will acquire its sister company, Petron Fuel International Sdn Bhd’s (PFISB) LPG marketing and sale business.
The agreement for the acquisition is for a period of two years and may be extended by mutual agreement by the two companies. The total consideration over the duration of the agreement (which includes variable bottling cost that is charged at the prevailing market rate of the LPG) is expected to be RM16.7 million.
Since the acquisition of controlling shares in Petron and PFISB by Petron Oil & Gas International Sdn Bhd, an indirect wholly-owned subsidiary of Petron Corp of the Philippines, both companies have been exploring means of streamlining the LPG business.
This is because being under two separate companies requires separate operational and financial management.
The LPG cylinders used by both companies are of different sizes and colour schemes. This is contrary to plans on harmonising the brand and image of all products under the Petron brand.
Currently, Petron’s LPG cylinders use the Esso brand while PFISB uses the Mobil brand, both of which are proprietory to ExxonMobil, as the right of using ExxonMobil’s proprietory brand names are for a limited duration only.
Pursuant to this transaction, all LPG cylinders marketed by Petron subsidiaries in Malaysia are being rebranded as PETRON-GASUL, a proprietory LPG brand of Petron Corp.
In an exchange filing last Friday, the company said it will focus on its strong and visible retail fuels marketing business and commercial business including liquefied petroleum gas (LPG), industrial and wholesale fuels and aviation fuels. It also has a strong presence in petroleum refining and supply/distribution, elements within Petron that support its retail and commercial businesses.
The petroleum products maker and distributor said its resources would be more beneficially utilised in fuels marketing and commercial businesses where there is certainty of higher return on investment (ROI). It is estimated that the marketing efforts to introduce a new brand of lubricants in the Malaysian market would not yield immediate returns.
The loss of profit contribution from the sales of a new brand of lubricant to the company’s profitability would not be materialised.
Petron also announced that it will acquire its sister company, Petron Fuel International Sdn Bhd’s (PFISB) LPG marketing and sale business.
The agreement for the acquisition is for a period of two years and may be extended by mutual agreement by the two companies. The total consideration over the duration of the agreement (which includes variable bottling cost that is charged at the prevailing market rate of the LPG) is expected to be RM16.7 million.
Since the acquisition of controlling shares in Petron and PFISB by Petron Oil & Gas International Sdn Bhd, an indirect wholly-owned subsidiary of Petron Corp of the Philippines, both companies have been exploring means of streamlining the LPG business.
This is because being under two separate companies requires separate operational and financial management.
The LPG cylinders used by both companies are of different sizes and colour schemes. This is contrary to plans on harmonising the brand and image of all products under the Petron brand.
Currently, Petron’s LPG cylinders use the Esso brand while PFISB uses the Mobil brand, both of which are proprietory to ExxonMobil, as the right of using ExxonMobil’s proprietory brand names are for a limited duration only.
Pursuant to this transaction, all LPG cylinders marketed by Petron subsidiaries in Malaysia are being rebranded as PETRON-GASUL, a proprietory LPG brand of Petron Corp.
Source: The
Malaysian Reserve
Date: 04 March 2013
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