Esso Malaysia has reported an after-tax loss of RM8.6 million last year, compared with a profit of RM182.5 million for 2001. Revenues stayed little changed at RM 4 billion. (US$1=RM3.8).

Chairman Rob Fisher said: “2002 was a challenging year for Esso Malaysia Berhad (EMB), as marketing and refining margins were eroded by a substantial increase in crude and product costs through the year. Sales volumes were 98,000 b/d, an increase of 5,000 b/d over 2001 due to higher sales to affiliated companies.”

In a statement, the company said:
“Crude costs increased over US$12 (RM46) per barrel or 60% during the course of 2002. Product prices were unable to keep pace with this steep increase, resulting in a squeeze on both refining and marketing margins.

“Marketing margins in the controlled product sector were particularly weak due to pricing lag effects that result from Malaysia’s Automatic Pricing Mechanism (APM). This was the reverse of the situation in 2001 when the company realised substantial margin benefits from a sharp drop in crude and product costs.

“Looking through the recent volatility in crude and product prices and the related price lag effects on earnings, we believe that the underlying earnings power of the company is intact and indeed has been strengthened over the last two years.

“Continued improvements in the company’s cost structure, further optimisation of operations at the Port Dickson refinery and high-grading of the sales mix in each product line have all contributed.

“We feel these improvements helped to limit our losses in 2002 in the face of severe market conditions, and have positioned us for better results over the course of future business cycles.”

Despite the poor results, the board has proposed that Esso Malaysia declare a final dividend of 10 sen less Malaysian income tax at 28% per ordinary stock unit, for the year ended December 31, 2002. This matches the dividend that was paid for the 2001 fiscal year.