KUALA LUMPUR: RAM Ratings has assigned a final short-term rating of P1 to ESSO MALAYSIA BHD []'s proposed RM300 million Islamic Commercial Papers Issuance Programme (2011/2018).
In a statement June 3 RAM Ratings said the rating was mainly supported by the substantial financial flexibility that Esso derived from its parent, Exxon Mobil Corporation (ExxonMobil) ' the largest non-state owned integrated oil and gas major globally.
As an integral part of ExxonMobil's operations in Malaysia and the Asean region, the company was expected to continue benefiting from the financial strength of its ultimate parent, it said.
It said Esso was able to tap a US$200 million fixed-exchange-rate inter-company loan facility and a RM285 million loan/deposit facility from its sister companies; approximately 60% of these credit facilities remained unutilised as at end-September 2010.
Notably, Esso enjoys stable earnings from retail sales of Automatic Pricing Mechanism-regulated products, such as motor gasoline and diesel, via fixed returns for every litre sold, it said.
'However, its R&M operations remain influenced by the price volatility of crude oil and refined products, which fluctuate according to their respective global supply-and-demand forces.
'Meanwhile, the company's current limited refining capabilities generally constrain it from commanding higher margins compared to more complex refineries that are able to process a wider variety of crudes as well as from further reprocessing of heavy-fuel residues into higher-value products,' it said.
RAM Ratings said that despite lower sales volume on the back of reduced refinery output following a scheduled plant turnaround in 2010, Esso's revenue was lifted by 4.9% to RM8.43 billion in FYE 31 December 2010.
This was largely attributable to stronger petroleum product prices in 2010, said the rating agency.
'The Company's operating profit before depreciation, interest and tax leapt 62.8% year-on-year to RM425.95 million in fiscal 2010, supported by healthier margins as prices of refined products had risen faster than crude costs.
'Nonetheless, Esso's profitability is still subject to the price volatility of its raw materials and petroleum products,' said RAM Ratings' Head of Consumer and Industrial Ratings Kevin Lim.
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In a statement June 3 RAM Ratings said the rating was mainly supported by the substantial financial flexibility that Esso derived from its parent, Exxon Mobil Corporation (ExxonMobil) ' the largest non-state owned integrated oil and gas major globally.
As an integral part of ExxonMobil's operations in Malaysia and the Asean region, the company was expected to continue benefiting from the financial strength of its ultimate parent, it said.
It said Esso was able to tap a US$200 million fixed-exchange-rate inter-company loan facility and a RM285 million loan/deposit facility from its sister companies; approximately 60% of these credit facilities remained unutilised as at end-September 2010.
Notably, Esso enjoys stable earnings from retail sales of Automatic Pricing Mechanism-regulated products, such as motor gasoline and diesel, via fixed returns for every litre sold, it said.
'However, its R&M operations remain influenced by the price volatility of crude oil and refined products, which fluctuate according to their respective global supply-and-demand forces.
'Meanwhile, the company's current limited refining capabilities generally constrain it from commanding higher margins compared to more complex refineries that are able to process a wider variety of crudes as well as from further reprocessing of heavy-fuel residues into higher-value products,' it said.
RAM Ratings said that despite lower sales volume on the back of reduced refinery output following a scheduled plant turnaround in 2010, Esso's revenue was lifted by 4.9% to RM8.43 billion in FYE 31 December 2010.
This was largely attributable to stronger petroleum product prices in 2010, said the rating agency.
'The Company's operating profit before depreciation, interest and tax leapt 62.8% year-on-year to RM425.95 million in fiscal 2010, supported by healthier margins as prices of refined products had risen faster than crude costs.
'Nonetheless, Esso's profitability is still subject to the price volatility of its raw materials and petroleum products,' said RAM Ratings' Head of Consumer and Industrial Ratings Kevin Lim.
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