RETAILNETWORK EFFICIENCY
T H E F O C U S F O R 2 0 1 5 W A S T O I N C R E A S E T H E C A P A B I L I T I E S O F T H E E X I S T I N G
N E T W O R K A N D T O S W E A T T H E A S S E T S T H A T A R E A L R E A D Y I N H A N D
088PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
RETAIL
BUSINESS OPERATIONS
The Retail Business Division has always been at the forefront
of the Company’s businesses and is the touch point that is
constantly engaging the customers in delivering our
products and services.
The PETRONAS stations network remains the largest
throughout the nation, standing true to our brand essence
of being a trusted retailer with a passion for customers’
convenience.
The Retail Business drives the sales of fuel and non-fuel
products for the Company, providing a one-stop centre
convenience that delivers exceptional customer experience
at its stations.
FINANCIAL PERFORMANCE
In the wake of the fall in global crude oil prices, the Retail
Business remained stable despite shrinking margins and
lower revenue. For the year under review, Retail Business
contributed close to 50.0% of the Company’s overall margin
and about 40.0% of the Company’s net profit.
Facing tremendous challenges, the Retail Business continued
its pursuit of PDB’s goal to become Malaysia’s “Brand of 1st
Choice”. Adapting to the volatile market with determined
focus, the Retail Business posted a revenue of 16.0% lower
than the corresponding year under review. The lower
selling prices as a result of falling crude oil prices and
significant lower volume of Retail Diesel due to competitive
prices with commercial sector were the main factors
contributing to the lower revenue performance.
The non-fuel business segment continued to make
tremendous strides, growing from strength to strength and
holding its own, contributing more than 10.0% of Retail
Business’ total margin.
For the year under review, despite the weaker consumer
spending patterns, the Retail Business’ non fuel segment
still managed to record a 4.0% growth.
KEY PRODUCTS & SERVICES
PETRONAS Stations
The focus for 2015 was to increase the capabilities of the
existing network and to sweat the assets that are already in
hand. For the year under review, Retail Business operates
more than 1,000 stations.
Retail Business continues to shape and develop the future
of new Malaysian entrepreneurs that join the PETRONAS
Retail fraternity, either as an appointed station dealer or a
trusted business partner. In addition to this, SME businesses
are also given the opportunity to market their products
through the chain of Kedai Mesra convenience stores.
10.0% OF RETAIL BUSINESS TOTAL MARGINMORE THAN
NON-FUEL BUSINESS
Despite cautious consumer spending, the Retail Business’ non-fuel segment still managed to record a 4.0% growth.
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THE RETAIL BUSINESS DRIVES THE SALES OF FUEL AND NON-FUEL PRODUCTS FOR THE COMPANY, PROVIDING A ONE-STOP CENTRE CONVENIENCE THAT DELIVERS EXCEPTIONAL CUSTOMER EXPERIENCE AT ITS STATIONS.
090PETRONAS DAGANGAN BERHAD
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LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
RETAIL (continued)
Complementary Business
As convenience is the primary goal for customers that frequent PETRONAS
stations, the Retail Business believes in providing customers with solutions
to their needs, all under one roof. PETRONAS stations have been further
enhanced through complementary business offerings ranging from food-
to-go items to various business partner facilities that include QSR, banking
facilities, courier services and other conveniences.
During the year under review, the Company had in place 95 QSR outlets and
more than 70 other business partners to enhance the customer experience
at the stations. This year, Kenny Rogers Roasters and Roti Boy were amongst
the latest additions to the growing list of renowned business partners.
Kedai Mesra
The PETRONAS Kedai Mesra remains the
market leader in Petrol Station Convenience
Stores with the largest network of
convenience stores at petrol stations in
Malaysia. Kedai Mesra’s total network
currently stands at more than 760
nationwide. With convenience in mind, the
PETRONAS Kedai Mesra are fully equipped
with ATMs (1,549 ATM terminals), Touch ‘n
Go facilities (871 reload terminals) and
e-Pay terminals (1,025 terminals).
>1,000OPERATING STATIONS
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MORE THAN 70 OTHER BUSINESS PARTNERS TO ENHANCE THE CUSTOMER EXPERIENCE AT THE STATIONS
Card Business
PETRONAS Mesra Loyalty Programme (Kad Mesra)
Loyalty is important in the Retail Business. Without loyal
customers that continue to patronise PETRONAS stations
for the products and services, PETRONAS would not be
where it is today. As the business continues to evolve, so
does the customer who is always looking for that
something extra.
95 QSR OUTLETS
092PETRONAS DAGANGAN BERHAD
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LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
RETAIL (continued)
These customers are recognised and rewarded through the
PETRONAS Mesra Loyalty Programme. This programme
allows members to earn Mesra points using their PETRONAS
Mesra Cards when fuelling up at PETRONAS stations
nationwide or when purchasing products from the Kedai
Mesra. Accumulated points can be used to redeem either
fuel or selected items from the Kedai Mesra by simply
swiping the Kad Mesra. The PETRONAS Mesra Loyalty
Programme brings further value to customers as Kad Mesra
holders are able to enjoy a wide variety of special offerings
or discounts through the ever growing stable of partners
and merchants.
For the year under review, the Company extended the
Card’s benefits and privileges through new strategic
partnerships. Recently it just established a partnership with
ANGKASA, working on the strength of their network and
members base. Existing partners and merchants are AirAsia
BIG, Automobile Association of Malaysia, Astute Xperience
(Travel Services), Pryxious.com (travel channel management),
PETRONAS Twin Towers Gift Shop, Twin Towers Fitness
Centre, PETROSAINS, San Francisco Coffee, Sunway Lost
World of Tambun, 11th Street and Zalora.
PETRONAS SmartPay
The PETRONAS SmartPay is a corporate card which offers
convenience and efficiency for companies to facilitate
greater control over their fleet management in terms of
monitoring movement and expenditure of their fleet’s fuel
utilisation. Fleet management has become even more
convenient since the introduction of our Smartpay Online
system which allows the customers to review and monitor
all transactions for all their cards and also allows for the
Fleet Manager to block or increase credit limits for any
particular card when necessary.
THE PETRONAS MESRA LOYALTY PROGRAMME BRINGS FURTHER VALUE TO CUSTOMERS AS KAD MESRA HOLDERS ARE ABLE TO ENJOY A WIDE VARIETY OF SPECIAL OFFERINGS OR DISCOUNTS THROUGH THE EVER GROWING STABLE OF PARTNERS AND MERCHANTS.
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INSPIRING CHANGE
KEY INITIATIVES
Launch of the new PETRONAS Primax 97 with Advanced
Energy Formula
On 19 August 2015, PDB introduced its new PETRONAS
Primax 97 with Advanced Energy Formula that is engineered
for superior acceleration two weeks ahead of the gazetted
implementation date. The new fuel is also the first RON97
fuel to meet the Euro 4M specification and it complements
our PETRONAS Primax 95 that gives superior efficiency. The
launch, held at PETRONAS station in Technology Park
Malaysia, was officiated by YB Dato’ Seri Hamzah Zainuddin,
Minister of MDTCC and attended by Encik Md Arif Mahmood,
Chairman of PDB, Encik Mohd Ibrahimnuddin Mohd Yunus,
MD/CEO of PDB, Ministry officials, PDB Management and
members of the media.
At present, about 60.0% of PETRONAS stations offer the
new PETRONAS Primax 97 with Advanced Energy Formula
with more to be made available in 2016.
of PETRONAS stations offer the new PETRONAS Primax 97 with Advanced Energy Formula with more to be made available in 2016.
60.0%
For the year under review, the Company continuously
engaged with potential and current customers
through various programmes such as product
showcases, fraud mitigation sessions, festive
celebrations, sporting and leisure activities.
094PETRONAS DAGANGAN BERHAD
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INSPIRING CHANGE
RETAIL (continued)
Marketing and Promotion
Promotions are an important aspect in Retail Business, especially in promoting PETRONAS Primax, PETRONAS Dynamic Diesel and Kedai Mesra offerings. To attract customers to the stations, the following promotional activities
were conducted throughout 2015:• PETRONAS Ways2Win (13 April – 14 June 2015) – with every RM40
purchased at PETRONAS stations, customers have two ways to win.
Customers can either choose a voucher for instant redemption or
to participate in the contest for a chance to win the grand prize of
three years worth of fuel.
• Bank Islam Swipe & Drive Further Campaign (15 June –
15 September 2015) – with minimum RM30 spent using their Bank
Islam card at PETRONAS stations, customers can stand a chance to
win daily prizes of RM1,000 worth of fuel and the Grand Prize of an
Umrah Package or one year worth of fuel.
• Kombo RM5 Untuk Cuti Idaman (1 July – 31 August 2015) –
Purchase any RM5 Combo in the Kedai Mesra and stand a chance
to win a dream vacation.
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• Home of Champions Merchandise Redemption
(15 September – 31 January 2016) – specially
designed merchandise with F1 theme was made
available at all PETRONAS stations for redemption.
• Spend at PETRONAS with Maybank Cards
(15 October – 15 December 2015) – customers
stood a chance to win a Mercedes Benz and
Cash Back.
Customer Relationship Management
Maintaining customer relations is without question a
primary importance in ensuring the sustainability of our
business. In our effort to improve customer experience
at our station, the Retail Business had conducted
series of CIA programmes throughout 2015. Apart
from conducting marketing activities on PETRONAS
products and services as well as acquisition of new
PETRONAS Kad Mesra members, the programme was
also used as a platform for Retail Business to engage
with customers in getting a better understanding of
their needs.
PROSPECTS
The Retail Business remains committed in growing
the business to become the domestic retail market
leader, leveraging on its extensive PETRONAS station
network nationwide. To achieve this target, the Retail
Business will continue to provide innovative products
and differentiated services, supported by improved
marketing initiatives that not only reach out to
customers, but also reward existing and potential
customers throughout Malaysia.
096PETRONAS DAGANGAN BERHAD
KEY MESSAGES
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LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
COMMERCIALVALUE DRIVEN GROWTH
C O M M E R C I A L B U S I N E S S I S F U L L Y C O M M I T T E D T O S E R V E T H E N E E D S O F T H E
V A R I O U S I N D U S T R I E S T H R O U G H I T S D Y N A M I C S A L E S F O R C E A N D
D I F F E R E N T I A T E D S E R V I C E S
098PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
COMMERCIAL
BUSINESS OPERATIONS
The Commercial Business markets petroleum products in bulk to
various industries and market segments including manufacturing,
aviation, power, oil and gas exploration, agriculture, fisheries and
transportation. Fully ISO 9001:2008 certified since 2008, the
Commercial Business is fully integrated with a strong supply base,
logistics and extensive distribution network throughout Malaysia.
The main petroleum products marketed by Commercial Business
are Diesel, Aviation Fuel, Bitumen, Fuel Oil, Kerosene and Mogas.
In 2015, Commercial Business expanded its product range to
include Petroleum Coke and Sulphur, marketed mainly in the
domestic market. The Commercial Business is fully committed to
serve the needs of the various industries through its dynamic
sales force and differentiated services.
FOCUSED AND CONCERTED EFFORTS, SUPPORTED BY EFFECTIVE COST MANAGEMENT INITIATIVE GREATLY CONTRIBUTED TO THE COMPETITIVENESS AND GROWTH OF THIS PORTFOLIO.
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FINANCIAL PERFORMANCE
Despite the challenging external environment in 2015,
cloaked by the drastic fall of crude prices, which started in
June 2014, the weakening Ringgit and uncertainties in
economic environment, the Commercial Business overcame
these adversities and produced a commendable bottom
line. The Commercial Business initiated various initiatives
and plans to remain robust and as a result, recorded its
best performance in the last ten years in terms of profitability.
For the year in review, the Commercial Business contributed
about 40.0% of PDB’s net profit. As compared to the
previous year, the Commercial Business registered stronger
financial performance in 2015, as its sales volume increased
by about 1.0% and net profit contributed by 17.0% whilst its
revenue dipped about 29.0% against the same corresponding
year under review.
KEY PRODUCTS AND SERVICES
Diesel experienced a significant volume growth of 4.3% from 2014, despite the modest overall industry demand
growth of only 1.0% to 2.0%. Focused and concerted
efforts, supported by effective cost management initiatives
greatly contributed to the competitiveness and growth of
this portfolio. Highest growth was recorded in the dealership
segment, bunker and construction sectors whilst demand
from subsidised sectors such as fisheries and transportation
showed contractions during the year under review, a direct
result from the ongoing subsidy rationalisation efforts by
the Government. The overall industry demand for Diesel in
the power sector and natural gas connected industries also
showed contractions as a result of more stable natural gas
supply during the year. Demand from oil and gas exploration
sectors also experienced a slowdown in 2015 due to lower
exploration activities stemming from the bearish crude oil
price environment.
AWARDED
BEST REGIONALJET FUELMarketer in Asia Pacific for 2 consecutive years
100PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
COMMERCIAL (continued)
Jet A-1 fuel demand declined as a result of softening demand for air travel in Malaysia as well as the ongoing
route rationalisation by Malaysia Airlines Berhad despite
some growth in the low cost sector. The result is also
attributed to the negative perception of the Malaysian
aviation industry, a consequence from the three aviation
tragedies involving Malaysia Airlines Berhad and AirAsia,
Malaysia’s two biggest home carriers and the largest
domestic customers of Jet A-1. Despite these challenges,
the Commercial Business minimised the impact through
better cost control and by securing contracts with other
domestic and foreign carriers such as Turkish Airlines,
British Airways and Lufthansa. Despite the generally
mundane performance of the aviation sector in 2015, the
industry is projected to rebound in the coming years, in line
with the expected recovery of the economy, regional boost
in tourism and cargo demands in Asia.
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Fuel Oil remains a significant portfolio for the Commercial Business. For the inland market, closure of the
Port Klang WEBS terminal since October 2014 provided the
Commercial Business with the logistics advantage to supply
key customers from PDB’s Prai depot in Penang. However,
demand for Fuel Oil from the Power Sector was significantly
reduced as a result of sufficient piped gas supply and
cheaper coal. Despite this challenge, the Commercial
Business successfully sustained its margin performance for
Fuel Oil by optimising its inventory and reducing unit cost,
whilst ensuring continuous supply to the key sectors in
bunker and other inland industries.
Bitumen enjoyed a good year, despite operating in a highly competitive market, during the year under review.
This segment recorded outstanding performance with sales
volume up by 33.0% in 2015 from 2014. This strong
performance was supported by the effective supply
optimisation and competitive pricing strategies implemented
at all depots throughout Peninsular Malaysia, Sabah and
Sarawak.
The Commercial Business is committed to further develop
its capabilities and resources to strengthen its position in
the domestic Bitumen market. Moving forward, the
Commercial Business will continue to aggressively
strengthen the Company’s markets position, whilst taking
advantage of several major infrastructure projects slated for
development in 2016.
From 1 January 2015, the Commercial Business started
introducing new product portfolios into its range of
offerings, namely Petroleum Coke and Sulphur. Petroleum
Coke is mainly used by industries for heating, or blending
with coal to enhance its calorific value. Sulphur, on the
other hand, is used as feedstock to produce various
chemical products including sulfuric acid and solvents. The
first year sales performance of these special products have
been very encouraging, with volume amounting to
390,000MT for Petroleum Coke and 57,000MT for Sulphur
sold. Moving forward, Commercial Business will continue to
capture the tremendous growth potential in further
developing our marketing capabilities in these products, not
just as a value added portfolio to our current product
range, but also as diversified offerings to our customers.
33.0 %This segment recorded an outstanding performance in sales volume for 2015 against corresponding year under review
BITUMENSEGMENT
102PETRONAS DAGANGAN BERHAD
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LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
COMMERCIAL (continued)
Providing fuel is essential for Malaysia’s growth and
development. We are involved in major infrastructure and
development projects in Malaysia. Several key projects that
were initiated in 2015, such as RAPID Pengerang, received
direct and indirect involvement from PDB.
The Commercial Business takes seriously its responsibility to
ensure customers’ satisfaction. We truly understand the
importance of ensuring continuous supply of our products
and its contribution to the bottom line of our customer’s
business. High quality products and services as well as
supply continuity to these sectors are crucial in ensuring
the sustainability and continuity of the sectors in Malaysia.
The year 2015 also marked a milestone for Commercial
Business with the commencement of operations of its first
Commercial Fuel Station in Pengerang on 1 October 2015.
The station with a capacity of 360,000 litres serves myriad
of vehicles, lorries and buses used in the RAPID project in
Pengerang.
Apart from supporting the RAPID Project development in
terms of ensuring consistent fuel supply, the Commercial
Business also provided ample business opportunities for
local entrepreneurs to venture into Commercial retailing
through various commercial dealership appointments.
KEY INITIATIVES
Aviation Technical Services Assistance
Our expertise in the aviation industry and the adoption of
PETRONAS Aviation Technical Standards are recognised and
adopted in all of PETRONAS aviation refuelling locations
worldwide. Our proven technical capabilities spearheaded
by our subsidiary, PAVSB, has allowed the Commercial
Business to extend the services wider to our valued
customers and partners in the domestic market. The
Commercial Business provides aviation technical services
which includes inspection, training as well as areas covering
HSE. In 2015, we extended our services to other small
domestic into plane service providers and individual
customers handling their own aviation fuel for their private
aircrafts and helicopters. This further reinforced the
recognition and trust towards PETRONAS as the “Brand of
1st Choice” and the preferred partner in the aviation industry.
RAPID Pengerang
The Commercial Business works to help meet the country’s
growing demand in a responsible way. This means operating
safely, reducing our impact on the environment and sharing
benefits with the communities.
For many decades, we have actively participated in the
national development agenda. PDB has a significant role to
play in the development and implementation phase.
THE YEAR 2015 ALSO MARKED A MILESTONE FOR COMMERCIAL BUSINESS WITH THE COMMENCEMENT OF OPERATIONS OF ITS FIRST COMMERCIAL FUEL STATION IN PENGERANG ON 1 OCTOBER 2015.
PROSPECTS
To sustain its market leadership in
Malaysia, the Commercial Business
will continue to provide personalised
services and differentiated offerings,
leveraging on PDB’s extensive, fully
integrated supply and logistics
strength. We believe that we are in
a strong position to add value to
the Company, further supported by
a n i n n o v a t i v e a n d d y n a m i c
workforce that is able to capitalise
on market opportunities. Despite
the prospects of a more challenging
year in 2016, maturing commercial
demand, market volatilities and
moderate economic growth, the
Commercial Business is expected
to push beyond our boundaries
and remain the key value driver to
PDB’s core strategies. At the
product portfolio level, Bitumen,
Petroleum Coke and Sulphur are
expected to maintain its growth
momentum and increase their
cont r ibu t ion to the ove ra l l
Commercial Business performance
in 2016.
LPGDELIVERING VALUE
L P G B U S I N E S S P U R S U E D A V A L U E D R I V E N G R O W T H S T R A T E G Y B Y F O C U S I N G O N C O S T O P T I M I S A T I O N A N D I M P R O V I N G E F F I C I E N C Y A C R O S S I T S V A S T D I S T R I B U T I O N N E T W O R K
106PETRONAS DAGANGAN BERHAD
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CORPORATE DISCLOSURES
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LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
LPG
The LPG Business has successfully reinforced its position as
Malaysia’s No. 1 Cooking Gas through its value driven
growth strategy by focusing on cost optimisation and
improving efficiency across its vast distribution network
despite a very challenging market environment in 2015. The
LPG Business continued to maximise value for the household
segment and further improved its competitive edge in the
commercial segment through superior customer services.
BUSINESS OPERATIONS
The LPG Domestic Business drives the marketing and sales
of cooking gas under the brand name of Gas PETRONAS,
currently available in four different cylinder sizes – 12kg and
14kg suitable for household use, while the 50kg and bulk
LPG (ranging from 200kg to 32,000kg tank sizes) are
suitable for both SMIs and industrial customers.
Through its ‘value driven growth’ strategy, the LPG Domestic
Business has commendably strengthened Gas PETRONAS’
position as Malaysia’s No. 1 Cooking Gas.
FINANCIAL PERFORMANCE
In its pursuit to deliver maximum value, LPG Domestic
Business successfully contributed about 20.0% to the
Company’s bottom line in 2015 compared to about 16.0%
contribution in corresponding year under review.
KEY PRODUCTS AND SERVICES
12kg and 14kg Cylinders
During the year under review, the subsidised household
segment comprising of 12kg and 14kg cylinders continued
to be the key contributor to the LPG Business. The LPG
Business leveraged on Gas PETRONAS’ vast network of
authorised dealers to sustain its market leadership while
enhancing value. Further enhancements were made through
value driven initiatives that included sweating of assets and
focusing on high cylinder turnaround areas to drive the
business to a new level of performance.
50kg Cylinders and Bulk Sales
The commercial segment recorded a slight decrease in
volume for the year under review as compared to the
corresponding year under review due to aggressive
expansion of natural gas distribution, particularly in the
Northern and Southern regions. The impact was cushioned
through the increase in C50kg sales via intensified marketing
efforts coupled with stronger enforcement by MDTCC on
illegal subsidy leakage linked to decanting activities and low
Saudi Contract Price environment in 2015.
KEY BUSINESS INITIATIVES
Cost Optimisation
The LPG Business initiated various cost optimisation
initiatives in its pursuit of achieving greater cost efficiencies
that is centred on improving contract management
performance and enhancing operational excellence, in a bid
to unlock value across its business chain.
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Governance and Internal Control
Internal and external audits were
undertaken throughout the year under
review to ensure Governance and Internal
Control was duly exercised. The LPG
Business has been ISO 9001:2008
certified since 2007, with implementation
of Quality Management System which
fulfils the requirements from processes,
procedures, compliance to governance
on marketing and sales of LPG products
to customers.
During the year under review, the LPG
Business has successfully demonstrated
its ability to maintain the ISO certification
through an audit conducted by SIRIM in
December 2015.
“12kg & 14kgCONTINUED TO BE THE KEY CONTRIBUTOR TO LPG BUSINESS”
108PETRONAS DAGANGAN BERHAD
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LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
LPG (continued)
INTERNATIONAL BUSINESS
The LPG Business is a key segment
of the Philippines downstream oil
industry. As a widely used fuel
commodity in the country, the LPG
Business sector is highly competitive
in a deregulated market condition.
In the Philippines, PEPI’s customer
base in Mindanao, Visayas and
Luzon is served via an established
l o g i s t i c s s u p p o r t s y s t e m ,
infrastructure and continuously
expanding network of distributors.
PEPI has the second largest market
share in the Visayas and Mindanao
regions, covering household,
THROUGH ITS ‘VALUE DRIVEN GROWTH’ STRATEGY, THE LPG DOMESTIC BUSINESS HAS COMMENDABLY STRENGTHENED GAS PETRONAS’ POSITION AS MALAYSIA’S NO.1 COOKING GAS.
NO.1COOKING GAS
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commercial, autogas and bulk industrial LPG
segments. PEPI is focused on strengthening its
growth trajectory in the high margin household
segment through prudent inventory management,
risk management and provision of differentiated
services to industrial customers.
PEPI is firmly committed towards offering quality
and safe LPG cylinders. In realising this, it has
introduced initiatives that improved operations
and supply logistic costs. Other continuous
initiatives include the enhancement of processes
and frameworks on corporate governance,
guided by the Group’s stringent policies and
guidelines.
PROSPECTS
Backed by solid foundation and dedicated
workforce, the LPG Business remains steadfast
in reinforcing its position, not only as Malaysia’s
No. 1 Cooking Gas but also as the overall leader
in the nation’s LPG industry, whilst delivering
value and continuously enhancing its services to
its loyal customers.
LUBRICANTSINNOVATING CHANGE
O U R R A N G E O F P R E M I U M A U T O M O T I V E L U B R I C A N T S P R O D U C T S C O N T I N U E T O
E V O L V E A N D I S T O D A Y R E C O G N I S E D A N D A C C R E D I T E D B Y M A J O R A U T O M O T I V E
M A N U F A C T U R E R S
112PETRONAS DAGANGAN BERHAD
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BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
LUBRICANTS
BUSINESS OPERATIONS
The Lubricants Business retained its market position despite a challenging and competitive industry
outlook. Driven by the Company’s aspiration to achieve market leadership in the near future, the
Lubricants Business underwent a transformation journey with the consolidation of lubricants
business into one entity that is PDB’s subsidiary, LDSB, which was then renamed as PLM(M)SB, to
undertake the sales and marketing activities of PETRONAS Lubricants Business in Malaysia.
Leveraging on the extensive range of lubricant products, the Business caters to wide markets
covering Passenger Vehicles, Motorcycles, Commercial Vehicles, Industrial and Marine segments
and specialises in the lubricant functional fluids and technical services.
2NDLARGESTlubricants market in Southeast Asia
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THE PETRONAS SYNTIUM RANGE WAS UPGRADED TO INCLUDE °COOLTECH™, A UNIQUE FORMULATION OF BASE OILS AND ADDITIVES THAT FIGHT EXCESSIVE ENGINE HEAT
FINANCIAL PERFORMANCE
In view of Malaysia’s weak economic condition during the
year under review, the Lubricants Business recorded a lower
volume against corresponding year under review due to the
cautious consumer spending.
KEY PRODUCTS & SERVICES
Passenger Car Motor Oils cater to the lubricants needs of
the Passenger Vehicle segment in the automotive industry.
PETRONAS Syntium is our flagship product which fully
complements the semi synthetic to full synthetic range.
During the year under review, the PETRONAS Syntium
range was upgraded to include °CoolTech™, a unique
formulation of base oil and additive that fights excessive
engine heat.
Key accounts using our PETRONAS Syntium range are
Perodua, PROTON, Naza KIA, Peugeot, Citroen, Mercedes
Benz, BMW and more. Our product offerings also include
PETRONAS Mach 5 premium mineral grade, PETRONAS
NGV Lube and PETRONAS M-Plus.
Motorcycle Oils cater to the requirements of the
motorcycle segment. We have two brands under this
segment, namely PETRONAS Syntium Moto and PETRONAS
Sprinta. PETRONAS Syntium Moto offers products from the
semi-synthetic to full synthetic grades while PETRONAS
Sprinta offers mineral grades.
Commercial Vehicle Lubricants cater to lubricant usage
for commercial vehicles (i.e. trucks, bus, prime-movers and
the like) that run on heavy duty diesel engines. PETRONAS
Urania is our brand for this segment and it offers products
from the mineral to the full synthetic range. To further
complement this segment, we also offer automotive gear
oil, automatic transmission fluid and specialty products such
as brake fluid and coolants.
Industrial and Marine Lubricants offer products targeted
to industrial and marine segments. We have a full range of
lubricants to meet consumer requirements from compressor,
circulation, hydraulic, turbine, gear oil and marine products.
PETRONAS LubeXperts are fully branded PETRONAS
workshops for passenger cars and motorcycles, offering a
complete range of PETRONAS Lubricants products. Initiated in
2013, it is aimed at expanding market penetration and
increasing PETRONAS Lubricants brand exposure in hightstreet
segment as well as at PETRONAS stations. The first LubeXpert
was launched at Auto Deutsch, Desa Pandan on April 2013. In
2015, 16 more new LubeXpert outlets opened, making it to
the total of 67 LubeXpert outlets currently operating nationwide
KEY INITIATIVES
Formation of PETRONAS LUBRICANTS MARKETING
(MALAYSIA) SDN BHD
Transformation Initiatives
During the year under review, the Lubricants Business went
through a transformation journey with the formation of a
single entity to undertake the sales and marketing activities of
PETRONAS Lubricants Business in Malaysia. The strategic
formation of this new entity will be a strong platform for the
Business to achieve its market leadership aspirations, due to
the enhancement of its business focus and talent management.
The transformation journey started in late August 2014, involving
the leadership teams of the Lubricants Business entities
(Lubricants Business Division in PDB and LDSB) as well as those
from PLISB. The key objective of the transformation initiatives
was to look into the redesign of PETRONAS Lubricants Business
model in Malaysia to create a unified commercial setup that will
enhance our capacity, deliver aggressive growth rates and attain
market leadership aspirations.
114PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
LUBRICANTS (continued)
Business operations for the unified entity began on 1 January 2015 with
a series of initiatives implemented to stabilise and streamline operational
processes to cater to the compatibility integration with existing PDB and
PLISB operations as well as to ensure a seamless level of service for
customers. On 11 May 2015, the entity was officially named PLM(M)SB.
Route-To-Market in East Malaysia
The Lubricants Business cited positive growth in East Malaysia (Sabah and
Sarawak) due to the implementation of end-to-end transformation called
RTM. Initiated in Peninsular Malaysia in 2013, RTM showed double digit
volume growth in 2013 and 2014.
The objectives of extending this programme to East Malaysia was to
drive growth and establish our position as a market leader. In May 2015,
nine Market Execution Partners for East Malaysia were signed on to
extend PLM(M)SB’s reach in East Malaysia for the implementation of the
RTM programme.
The transformation journey of PLM(M)SB was continued with the
establishment of a stronger financial enterprise system, SAP ECC6, that
streamlined and integrated the supply chain practices with PLISB for
better efficiency as well as address capability development within the
new organisation.
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PROSPECTS
With stiff competition and emergence of new players in the
industry, the Lubricants Business will continue its aggressive
growth strategy and strive towards establishing its market
leadership.
As part of an overall initiative to grow PLM(M)SB business,
the transformation initiatives implemented addressed key
areas of RTM for the high street indirect business in
Peninsular Malaysia and the deployment of sales teams
managing Direct Key Accounts in their respective regions.
This has enhanced our reach and improved our level of
customer service to both customers and consumers alike.
The transformation journey continues to focus on
consolidating the indirect and direct Lubricants Businesses
of PDB into a single entity to garner synergies to achieve
an improved speed to market, focused execution and talent
development.
INTERNATIONAL SUBSIDIARIES
The lubricants market in Thailand has strived despite having
aggressive competition throughout the year. During the
year under review, the revenue for Lubricants Business in
Thailand had decreased by 5.6% as a result of lower unit
selling price.
Throughout the year under review, PIM(T)CL decided to
focus on business growth, which involved engaging their
OEMs and conducting intensive marketing and promotional
programmes. Due to the high competition experienced in
the region, PIM(T)CL focused on increasing brand awareness
via the use of digital media. Programmes for both internal
and external parties were done in order to have fully trained
distributors of the product. In pursuit of this, PIM(T)CL has
also taken the necessary steps to increase the number of
sales personnel and dealers in the region.
DELIVERING EXCELLENCE
S T R A T E G I E S H A V E A L W A Y S B E E N D R I V E N A N D I N S P I R E D B Y T H E F O U R C O R E V A L U E S ,
N A M E L Y S T A K E H O L D E R V A L U E , C U S T O M E R S A T I S F A C T I O N , O P E R A T I O N A L E X C E L L E N C E
A N D O R G A N I S A T I O N A L E F F E C T I V E N E S S
SUPPLY ANDDISTRIBUTION
118PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
SUPPLY ANDDISTRIBUTION
BUSINESS OPERATIONS
During the year under review, SDD focused on cost optimisation
and supply reliability. With its extensive supply chain network of
primary and secondary distribution, SDD appraised and
transformed existing processes to provide the most economical
and reliable delivery to the customers supporting other enablers
and business lines. This was done by ensuring uninterrupted
end-to-end supply chain from product sourcing right up to
delivery of the Company’s products to customers and dealers.
KEY ROLES AND RESPONSIBILITIES
SDD’s main roles and responsibilities include product sourcing,
distribution, infrastructure planning and engineering services.
These functions ensured adequate and reliable operational
facilities for business sustainability.
SDD’s strategies have always been driven and inspired by its four
core values, namely Stakeholder Value, Customer Satisfaction,
Operational Excellence and Organisational Effectiveness.
OVERALL EQUIPMENT EFFICIENCY
81.0% 89.0%through continuous operational monitoring, SDD improved its LPG bottling operations’ Overall Equipment Efficiency by reducing operational interruptions while maximising on delivery.
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KEY BUSINESS INITIATIVES
Stakeholder Value
SDD remained committed towards creating value for its
customers and business partners by improving the efficiency
of product sourcing, primary and secondary distribution as
this ensured better control and undisrupted supply. SDD
also focused on optimising its terminals’ inventory and
operating expenditure to continuously provide competitive
advantages and cost optimisation. The realignment and
optimisation of TC vessels resulted in the cost reduction of
approximately 5.0% of the total annual freight cost.
SDD also actively looked for new ventures to add more
value to the services provided. As such, SDD worked with
other oil companies on throughput arrangements, leveraging
on existing facilities and capabilities without jeopardising its
market share. This initiative not only contributed towards
additional income to the organisation and further improved
asset utilisation but also reduced the terminal’s operational
unit cost. More value added initiatives are being planned to
support business growth and sustainability.
Customer Satisfaction
SDD focused on enhancing customer satisfaction through
the delivery of quality products and differentiated services
in a timely and cost effective manner. A new process to
manage customer complaints online was developed to
ensure it adhered to the standard operating procedures to
deliver on the Company’s brand promise. Moving forward,
ongoing efforts are being carried out to ensure that these
practices becomes a norm for SDD to carry out its business.
Operational Excellence
A key factor at SDD is to ensure that products are delivered
to customers at the most competitive cost and without
operational interruptions. In pursuit of this, SDD strategised
and initiated the Integrated Inventory Management system
that minimised the intermonth price exposure variance due
to the prolonged downward trend in oil prices. Through
continuous monitoring and proactive actions taken, this
initiative resulted in a more current unit cost that reflected
current market prices. In essence, this initiative promoted
competitive pricing that allowed business lines to realise the
Company’s sales agenda.
The initiative started with daily oil prices analysis and
monitoring of variance between the Company’s product
costs vis-à-vis market price. The continuous price downward
trend triggered all parties to successively implement pre-
determined mitigation actions such as frequent and smaller
parcel products delivery to the Company’s terminals and
managed product intake from refineries to ensure better
pricing strategy. This resulted in competitive product pricing
and performance improvement.
In addition, with continuous operational monitoring, SDD
improved its LPG bottling operations Overall Equipment
Efficiency rate from 81.0% to 89.0%, reducing operational
interruptions while maximising on delivery.
120PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
SUPPLY ANDDISTRIBUTION (continued)
BUSINESS ACHIEVEMENTS
MSOSH 2014 Award
Following the success of the Company in the MSOSH 2013
Awards in the corresponding year under review, the
Company achieved yet another success story during the
year under review by sweeping six Gold Awards for
commendable occupational safety and health performance
in the MSOSH 2014 Awards. The award recognises
companies from various sectors who have performed
exceptionally well in occupational safety and health aspects.
The award strengthened the Company’s commitment
towards occupational safety and health, while at the same
time boosting the morale and confidence of employees
towards building a safe working environment.
…THE COMPANY ACHIEVED YET ANOTHER SUCCESS STORY DURING THE YEAR UNDER REVIEW BY SWEEPING SIX GOLD AWARDS FOR COMMENDABLE OCCUPATIONAL SAFETY AND HEALTH PERFORMANCE IN THE MSOSH 2014 AWARDS.
Organisational Effectiveness
To support the Company’s business growth and sustainability,
SDD continuously conducts various studies to improve the
Company’s efficiency. To further improve organisational
effectiveness, SDD conducted several major short and long
term studies, including a study on unmanned terminal
rationalisation and terminal optimisation review which
included the implementation of Drag Reducing Agent on
Multi Product Pipeline to improve its capacity. The studies
focused on detailed review of the Company’s options for
business continuation pre-and post-2020 as well as the long
term operational requirements beyond 2020, with due
consideration given to operational limitations and advantages.
Following this, specific strategies were developed and
assessed for business growth and sustainability. In essence,
these studies have provided PDB and SDD with a firm
direction on future plans with regard to its operations, for
the benefit of all stakeholders.
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has been equipped with a new bottom loading facility, a fire
fighting system consisting of fire tank and fire pumps and
one new administration building. The facilities are able to
support long term volume growth and demand surge
during peak seasons. Low inventories have also given
significant improvement in vessel replenishment turnaround
time due to lesser load port congestion and predicted
season which affected vessel travel times.
Biodiesel Project in East Malaysia
Following the Government’s mandate of Biodiesel
implementation, SDD completed all B7 Biodiesel facilities in
Sabah and Sarawak. With this, the whole country is now
being supplied with B7 Biodiesel. The implementation of the
government initiative in East Malaysia involved the use of
additional PME by 138,000MT annually, which resulted in an
annual saving of 159.4 million litres of fossil diesel. SDD
also ensured an uninterrupted supply of PME to support the
initiatives through efficient procurement to all PS in East
Malaysia.
PROSPECTS
Moving forward, SDD will continue to focus on cost
optimisation, supply reliability and sustainability, customer
satisfaction, HSE assurance and operational excellence
towards supporting the Company’s overall aspiration of
becoming the ”Brand of 1st Choice”.
KEY PROJECTS AND INITIATIVES
LPG Flexspeed System at Prai LPG Terminal
SDD successfully commissioned the Prai LPG Flexspeed
System ahead of schedule in December 2015 as it was
completed within a duration of 12 months. The objective of
the project was to increase the Prai LPG Terminal production
capacity with a high speed production bottling capability to
a total of 5,400 cylinders per hour via two Flexspeed
lines dedicated for C12 and C14 cylinders to meet the
Company’s growth.
The project resulted in operational improvements and cost
savings via manpower optimisation with the use of the
automated processes that came with the Flexspeed system.
PDB Miri Fuel Terminal
SDD successfully commissioned its biggest fully owned fuel
terminal in Sarawak, the PDB Miri Fuel Terminal, on 15
October 2015. The project was completed two weeks
ahead of time and obtained its Certificate of Fitness to
Operate, well ahead of its contractual period of 13 months.
Due to this, the project achieved cost savings as the capital
investment was 7.0% lower than the initial budgeted amount.
The terminal, currently operating with bigger storage
capacity of 3.0 million litres in total against its initial capacity
of 1.4 million litres, comprises two new vertical tanks to
support the business growth. Apart from that, the terminal
122PETRONAS DAGANGAN BERHAD
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CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
CRUDE OIL AND PETROLEUMPRODUCTS PRICE TRENDS
After the drastic drop of global crude benchmark, Dated Brent, in the second half of 2014, peaking at USD115.30/bbl in June 2014 to a low of USD56.00/bbl at the end of 2014; crude oil continued its downward trend throughout the year under review. Dated Brent touched the highest point at USD66.65/bbl on 13 May 2015 before gradually sliding down to a low of USD36.00/bbl towards the end of 2015.
For the year under review, Dated Brent price averaged at USD52.80/bbl, lower by about half from 2014’s average of USD99.00/bbl. For petroleum products, the MOPS prices are the key benchmark prices in this region. Throughout 2015, RON97 ULG, RON95 ULG and Diesel 0.05% averaged at USD71.00/bbl, USD69.00/bbl and USD65.00/bbl, respectively.
The unending bearish market for both crude oil and petroleum products is attributed to the oversupply situation
Note: Average monthly prices are based on MOPS.
as OPEC persistently held on to a “no output cut” policy to claim market share leadership. Furthermore, the strong supply growth from US tight oil, and the potential lifting of sanctions on Iran led to expectations of higher oil exports from Iran. On the demand side, expectation of interest rate hike by the U.S. Federal Reserve reduced investors’ appetite for commodities including oil, coupled with lingering concerns about lower economic growth in China and emerging markets.
Moving forward, global oil market is projected to remain in an oversupply position in 2016, although the pace of global stock builds could decrease to 0.6 mil bpd from 1.7 mil bpd, as OPEC supply remains robust despite lower non-OPEC output. Demand is expected to give support as the US economy is on the road of recovery and other emerging markets including China and India are expected to continue growing, albeit at a moderate level.
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
Jan2005
Jan2006
Jan2007
Jan2008
Jan2009
Jan2010
Jan2011
Jan2012
Jan2013
Jan2014
Jan2015
Dec2015
CRUDE: Tapis CRUDE: Brent RON97 ULG RON95 ULG
JET A-1 DIESEL 0.05% DIESEL 0.25%
USD/BBL
Year
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INSPIRING CHANGE
ECONOMIC OUTLOOKAND PROSPECTS
Global economic growth was estimated at 3.1% in 2015, a
slower growth compared to 2014. Expansion in the
advanced economies continued at a modest pace, while
growth in emerging markets and developing economies
decelerated, led by the imminent slowdown in China.
Downside risks to the outlook has escalated, particularly in
emerging markets and developing economies, influenced
by low commodity prices, increase in capital outflows from
the emerging markets, combined with downward pressure
on their currencies and increasing financial market volatility.
These risks pose downward pressure on the global economy,
with their effects to be felt throughout 2016. Global
economy is expected to be fragile, with modest growth
projected to be at 3.4%.
In the Southeast Asia region, estimated growth remains
steady at 4.6% in 2015 and projected at 4.9% in 2016. For
the ASEAN-5 economies (Indonesia, Malaysia, Philippines,
Thailand, Vietnam), weaker terms of trade as a result of
currency depreciation against major currencies is expected
to contribute to a bearish growth for both Malaysia and
Indonesia in 2015. The weaker commodity prices will
further drag the growth of the commodity-exporting
economies.
For Malaysia, GDP growth for 2015 was recorded at a
moderate pace of 5.0%, largely driven by the private sector,
both consumption and investments. Net exports remained
strong on the back of weaker imports due to weakening
Malaysian Ringgit. In 2016, the uncertainty of global
economy will continue to put more downward risks. GDP
growth is forecasted to moderate at between 4.0% and
4.5% as the economy continues to experience external and
internal uncertainties.
To address the challenging economic environment, the
Company will be aligning its business strategies to sustain
its overall market leadership and shareholders’ value. PDB
remains committed towards reinforcing its market leadership
and adding value to its businesses by strengthening its
brand, building on its innovative customer-centric mindset
and focusing on its cost competitiveness – in its journey
towards becoming the ”Brand of 1st Choice”.
PDB REMAINS COMMITTED TOWARDS REINFORCING ITS MARKET LEADERSHIP AND ADDING VALUE TO ITS BUSINESSES BY STRENGTHENING ITS BRAND, BUILDING ON ITS INNOVATIVE CUSTOMER-CENTRIC MINDSET AND FOCUSING ON ITS COST COMPETITIVENESS – IN ITS JOURNEY TOWARDS BECOMING THE BRAND OF 1ST CHOICE.
SUSTAINABILITYREPORT
RESPONSIBLE CORPORATE CITIZEN
P D B C O N T I N U E S T O E M B R A C E P O L I C I E S , P R A C T I C E S A N D P R O C E D U R E S T H A T
C L E A R L Y O U T L I N E O U R C O M M I T M E N T T O D E L I V E R S U S T A I N A B L E A N D L O N G T E R M
V A L U E T O O U R S T A K E H O L D E R S
126PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
SUSTAINABILITYREPORT
Our approach to sustainability is guided by PETRONAS Corporate Sustainability Framework which recognise the value of sustainable growth, giving back to the community, minimising the impact to the environment, as well as maintaining safe and reliable operations.
Sustaining the Company’s profitability
through value creation, e�cient
extraction and manufacturing
processes.
Limiting emissions of greenhouse
gases into the atmosphere.
Preventing and eliminating
injuries, health hazards and damage to
property and communities,
including conserving the environment.
Promoting e�cient use of hydrocarbons and water, and supporting the
use of renewable energy.
Shar
ehol
der
Valu
e
Natu
ral R
esou
rce
Use
Clim
ate
Chan
ge
Heal
th, S
afet
y &
Envi
ronm
ent
Soci
etal
Nee
ds
Biod
iver
sity
Ensuring projects and operations
do not have significant eect on the diversity of animals and
plants.
Prod
uct S
tew
ards
hip Ensuring that
products conform to
quality and HSE standards
throughout the product lifecycle
and meet the needs of society.
PETRONAS CORPORATE SUSTAINABILITY FRAMEWORK
Safeguarding human rights
within our sphere of influence,
contributing to community
needs, investing in training
and education, promoting arts and sports and conducting our
business in a transparent
manner.
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The Company holds our partners, contractors and suppliers
to similar standard of conduct.
The year under review saw continued volatility in the capital
markets with the Malaysian economy facing financial
vulnerability. As a responsible corporate citizen, PDB
continues to embed sustainability in our business operations.
We engage with our stakeholders comprising our own
employees, business partners, shareholders, customers,
regulatory authorities, local communities, contractors and
suppliers.
PDB is currently refining the tools, processes and
sustainabil ity reporting mechanisms internally. By
strengthening our business practices concurrently, this will
only help propel us into the future.
On 12 December 2015, Bursa Malaysia announced that PDB
has met the globally recognised sustainability standards for
inclusion in the FTSE4Good Bursa Malaysia Index. PDB is
very pleased with the recognition and inclusion in the
FTSE4Good Bursa Malaysia Index, and as such the Company
will strengthen and continue in its efforts to integrate
sustainability into its business strategy.
PART III WORKPLACE CULTUREAND ENVIRONMENT3. SUSTAINABLE DEVELOPMENT
3.1 PETRONAS is committed to sustainable development in order to help meet the world’s growing energy needs through economical, environmental and socially responsible efforts.
3.2 You should aim to create lasting social benefits; safeguard the health and safety of employees, contractors and neighbours; minimise disruptions to the community; lower emissions; minimise impact on ecosystems and biodiversity; and use energy, water and other resources more efficiently.
Sustainability to PDB means meeting the world’s growing energy needs in a responsible and holistic manner, by balancing the
economic, environmental and social needs of our stakeholders, steered by solid governance and ethical business practices.
In addition, PETRONAS CoBE expresses our commitment to sustainable development as follows:
Source: PETRONAS CoBE.
FTSE Russell (the trading name of FTSE International
Limited and Frank Russell Company) confirms that PDB
has been independently assessed according to the
FTSE4Good criteria, and has satisfied the requirements
to become a constituent of the FTSE4Good Index
Series. Created by the global index provider FTSE
Russell, FTSE4Good is an equity index series that is
designed to facilitate investment in companies that
meet globally recognised corporate responsibility
standards. Companies in the FTSE4Good Index Series
have met stringent environmental, social and governance
criteria, and are positioned to capitalise on the benefits
of responsible business practice.
SUSTAINABILITYREPORT (continued)
128PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
HEALTH, SAFETY AND ENVIRONMENT
PDB is committed to safeguard the health and safety of its people, business partners, customers, surrounding communities, public and all stakeholders; and puts protecting the environment as one of its priorities in driving a sustainable business and operational excellence.
The Company views the inculcation of HSE practices as a
prerequisite in this journey, aiming at making HSE a culture
that is embedded in all aspects of its business. In exercising
this aspiration, PDB holds on to the governance of HSE
Management System, a system that has been established
and rolled out to all of the Company’s operations since its
early days.
LEADERSHIP COMMITMENT
PDB’s management demonstrates visible HSE leadership
and commitment through a set of exemplary roles in
safeguarding the health and safety of our employees. The
roles include integrating and balancing HSE aspects in
business decisions and leading the development of HSE
strategic objectives and targets. In operationalising the
commitment, PDB management drives HSE initiatives at all
levels with clear expectations, targets and objectives; with
each member of the management carrying the highest
portion of HSE KPIs. The show of accountability and
responsibility is emulated at all levels; spreading the message
that HSE is critical to each and every one of its employees.
The management’s commitment is carved in the Company’s
HSE Policy Statement; a written pledge signed off by the
Company’s highest executive officer, MD/CEO. It mandates
strict adherence to HSE regulations and requirements
across the Company, by our employees, contractors,
suppliers and joint venture partners.
HSE governance at PDB is strengthened with commitment
to adhere to PETRONAS HSE Mandatory Control Framework
and PETRONAS Technical Standards. Adopting demonstration
of As Low As Reasonably Practicable (ALARP) as the
Company’s risk appetite in managing HSE risks, PDB
establishes its HSE strategic objectives and targets to
rationalise and operationalise the intent of its HSE aspiration.
The HSE strategic objectives are incorporated into HSE
Plan, and cascaded to the respective Divisions and closely
monitored to ensure everything that has been planned is
materialised effectively and in a timely manner.
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No. of Staff Trained in HSE
2014 80
2015 375
for year in 2015375
No. of Man Hour Training Hours Days
2014 3,512 439
2015 7,680 960
hours7,680 days960
BUILDING HSE FOUNDATION
In ensuring that a HSE plan is executable and effective, PDB
provides a firm foundation that includes competent
employees, a relevant structure, practical deliberation and
decision making platforms, monetary budget and access to
critical documents of standards, legislation and other
requirements. At all levels, HSE roles and responsibilities are
clearly defined in job or position descriptions and are
documented, communicated and reviewed periodically.
HSE Committees
HSE committees focus on relevant HSE issues and provide a
platform for communication amongst and between
management and employees. The committees are utilised to:
• Stimulate effective two way communication on HSE
issues between management and employees
• Engage all staff in the implementation of HSEMS
• Provide avenue for employees’ feedback on HSE matters
• Provide HSE advisory to the management for informed
decision
• Provide a platform to monitor adequacy and effectiveness
of controls put in place to manage HSE risks.
PDB Corporate HSE Committee is chaired by the MD/CEO,
who is also a Director of the Company. Heads of Divisions
were appointed as committee members to ensure commitment
from senior management team. HSE risks, incidents and
performance are also deliberated by the PDB MC and
presented to the Board for oversight on a quarterly basis.
HSE Capability
An intent is only as good as the person executing it. PDB
gives significant emphasis in ensuring its employees and
servicing contractors are capable in implementing assigned
tasks. Appropriate training programmes are identified and
provided to ensure necessary skills and knowledge are
acquired prior to performing a job in a safe manner. Basis
of identification includes job function requirement, legislative
and standards requirements, discipline pre-set training
requirement, as well as other best practices by the industry
with similar operations and activities. Compliance to training
requirements are monitored through the implementation of
HSE Competence Assurance, a system that is able to
provide the management an effective oversight over the
status of competency of the workforce.
SUSTAINABILITYREPORT (continued)
130PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
HSE Communications
For the year under review, we undertook initiatives to
engage our business partners, customers as well as
contractors to strengthen HSE management in our day to
day operations. Engagement with local communities and
public is also embedded in various programmes
implemented. Our initiatives were focused on factors that
could cause incidents and how to mitigate HSE risks.
We engaged authorities such as MDTCC, DOSH, DOE and
APMM to obtain updates on the latest legal requirements
that apply to PDB facilities. Such information is disseminated
to all relevant asset owners for compliance.
RISK-BASED PLANNING AND IMPLEMENTATION
With the HSEMS, supplemented by PETRONAS Enterprise
Risk Management Framework, provides risk oversight to
PDB Board, looking into various focus risk areas including
HSE risks. With a solid foundation set by the management,
operationalisation begins with HEMP, which calls for
identification of hazards, assessment of risks, and
implementation of controls. The process not only provides
detail contents of risks but also allow intelligent risk-based
prioritisation; a crucial approach in ensuring that plans are
structurally and systematically implemented. Several risk
assessment tools and techniques are used in HEMP, each
examining different aspects of an operation or activity;
suitable for specific areas or stages of operations. Examples
include Job Hazard Analysis, Process Hazard Analysis,
Chemical Health Risk Assessment, and Environmental
Impact Assessment.
Efforts towards enhancing HEMP implementation in 2015
included a Company-wide review of the Hazards and
Effects Register, involving Subject Matter Experts from the
Fuel, LPG and Aviation Terminals, Retail and NGV Stations,
as well as LPG and Commercial storage facilities; driven by
findings from past incidents and near-misses, audit findings,
newly-introduced hazard, facility or process and any change
that may introduce new or different level of HSE risks.
Notwithstanding all efforts in preventing incidents, the
Company realises that fate do find its ways; and normally at
the least expected of situation and time. Hence, it is also one
of the Company’s priority to keep everyone on their toes,
ready for any emergency situation. PDB Crisis and Disaster
Management Manual stipulates the requirements to take
proactive steps to ensure that we are prepared for unexpected
events. The manual also specifies the emergency response
structure along with clear roles and responsibilities. The
Company conducts periodic assessments to ensure adequacy
and effectiveness of controls to manage emergency
scenarios. This includes testing of response equipment’s
adequacy and readiness; as well as response capabilities
through emergency exercises at our operating facilities.
Regardless of how unwanted an incident is, the Company
strives to find remedies through the process of learning from
incidents. All incidents are investigated in a timely manner.
Recommendations resulting from investigations which
include both corrective and preventive actions are monitored,
and their progress is reported to the management. Lessons
learnt from incidents are shared across the Company
including relevant contractors and business partners to
prevent recurrence of similar incidents; in the form of specific
action items that are monitored and tracked for closure. At
all times, lessons are not only made learnt at similar
operations, but also being extended throughout the Company.
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FINANCIAL STATEMENTS
SHAREHOLDERS’ INFORMATION
INSPIRING CHANGE
TIER 3 EMERGENCY RESPONSE EXERCISE FOR KERTIH FUEL AND LPG TERMINAL (EX-PETIR II)
One of the biggest scales of emergency response exercise conducted
was Tier 3 Emergency Response (Ex-Petir II) which was jointly organised
by PDB, PETRONAS Carigali Sdn Bhd Peninsular Malaysia Operations and
PP(T)SB which was successfully conducted on 21 April 2015.
The exercise was conducted to assess the capability and readiness of
our ERT, Eastern Region Emergency Management Team, PDB
Headquarters Support and Unification of Command between PP(T)SB,
Central Emergency and Fire Services and various response agencies
towards mitigation of the crisis. The exercise included full movement of
ERT and deployment of firefighting equipment during emergency with
external assistance from Kertih and Kemaman response agencies
(BOMBA, police, and hospital).
CONTINUAL IMPROVEMENT
Built around the Plan-Do-Check-Act
cycle, HSEMS requires an effective built-in
improvement system, to stay relevant,
updated and continually improving.
Internal and independent HSE Assurance
exercises are carried out, with analysis of
findings being presented to the PDB MC,
PDB Board and PETRONAS Downstream
Executive Committee. For the year under
review, PDB was subjected to HSE
Assurance by PETRONAS Group HSE. The
findings and recommended corrective
actions of this assurance exercise was
consolidated with those of the HSE
assurance conducted in previous years by
several stakeholders. Correction Action
Plans were consolidated for Company-
wide implementation and tracked for
closure; providing not only a holistic
approach in gap closures; but also ensures
sustainability of implementation.
Analysis from these Assurances; together
with other inputs from incidents, near
misses and external lessons are put
together against each sub-elements of
HSEMS, allowing identification of areas
w i t h i n t h e s y s t e m t h a t r e q u i r e
improvement. This is a formal process in
place for PDB management to review the
effectiveness of the HSEMS implementation
and ensuring continual improvement of
the system; and subsequently the
Company’s sustainability in managing HSE.
132PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
SUSTAINABILITYREPORT (continued)
TOTAL EMPLOYEES
>1,900
2015
Total Training Mandays: 4,027 days
Average Training Mandays: 2.52 days
2014
Total Training Mandays: 4,380 days
Average Training Mandays: 2.74 days
LEADERSHIP DEVELOPMENT
In line with PETRONAS Leadership Vision, PDB strives to
develop leaders at all levels to uphold the PETRONAS
Shared Values and demonstrate the leadership competencies
in a high performance culture.
To build the right leaders to meet the Company’s needs
and aspirations, the PDB leadership development activities
and initiatives for employees at all levels are guided by
PETRONAS Learning and Development Framework, and Top
Talent Development Framework.
Leadership Development Programmes offered by the
PETRONAS Leadership Centre
Selected PDB executives, managers and higher management
employees participated in the wide array of high impact
leadership development programmes which were available
at PLC. The programmes held include the Senior
Management Development Programme, Management
BUILDING A HIGH PERFORMANCE CULTURE
Creating a high performance culture requires a systematic approach to managing the performance of organisations, teams and individuals. The Company is guided by PETRONAS Learning and Development Framework and Top Talent Development Framework which is grounded on the principle of continuous learning in nurturing competent workforce by strategic learning, leadership, technical knowledge and capabilities.
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FINANCIAL STATEMENTS
SHAREHOLDERS’ INFORMATION
INSPIRING CHANGE
Development Programme, Leadership Excellence at
PETRONAS for Senior Managers and General Managers,
Maximising Your Leadership Success, Emerging Leaders
Programme, and Foundation of Leadership.
Through these programmes, participants were equipped
with the required competencies to affect positive change in
the organisation, business acumen as well as management
and leadership skills.
PDB Managerial Development Programme
To enhance managers’ leadership competencies in leading
change, innovation and maximising business opportunities,
the PDB MDP was introduced as an in-house training
intervention. A total of 18 managers graduated from this
programme on 24 February 2015.
Throughout the seven month programme, participants
attended individual and group coaching sessions, sharing
sessions by internal and external leaders, and also a visit to
the 3M Innovation Centre. Participants also implemented
group projects that centred on innovative solutions, which
led to cost savings and improved the Company’s competitive
advantage.
Leadership that Empowers Programme
The programme was conducted with the objective of
enabling managers to acquire various leadership styles in
managing their subordinates. A total of 12 managers
attended the programme on 7 and 8 May 2015. This
programme was proven to be useful and effective through
the behavioural effectiveness survey which was conducted
several months after the training.
Succession Management
The PETRONAS Top Talent Management Value Chain was
implemented to identify top talents within the organisation,
review talent on an overall basis to determine their strengths,
areas of development, career plans and finally match them
against the critical positions within the organisation. In the
context of PDB, rigorous talent identification exercises
resulted in a 13.0% increase of its top talent pool. As for its
31 critical positions, plans were made to identify successors
for the positions to ensure uninterrupted business operations
upon employee mobility or attritions.
The increase number of experienced top talents that
resulted in a bigger pool of potential successors also
contributed towards the Ready Now Successors to PBD
critical positions ratio of 2.4:1. Annual reviews were
conducted on the succession plans to ensure its feasibility
for implementation, as and when the critical positions are
vacated.
In addition, PDB conducted succession plan reviews for its
Senior Management positions to identify suitable leaders
within PETRONAS to take over leadership positions whenever
required. The deliverables achieved served as valuable
information for PETRONAS Downstream Business in
deliberating and endorsing plans for future implementation.
SUSTAINABILITYREPORT (continued)
134PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
As part of the ‘Dagang Challenge’, the PDB UYP Batch 2015 launched the #FUELLINGCOMMUNITIES campaign on 28
November 2015 at Pusat Rukun Tetangga Taman Segar, Cheras.
The campaign‘s objective was to demonstrate that PETRONAS cares about the community, their wellbeing and
environment while creating a purpose for customers to spend at PETRONAS station.
The initiative was rolled out to a localised community area. Each customer who spent a minimum of RM30 on fuel
purchase at the selected PETRONAS station, will collect 1 Community Point. All accumulated points will be used for the
collective good of the entire community through charity activities.
+28,888 CPPainting and Gotong-Royong at
Pusat Rukun Tetangga Taman Segar
+88,888 CPPETRONAS StreetSmart Programmeat Sekolah Kebangsaan Taman Segar
+58,888 CPPark amenities for Pusat Rukun
Tetangga Taman Segar
PDB Unleash Your Potential Programme
The PDB UYP is a six-month programme, which kicked off on 11 August 2015 and participated by 13 PDB executives. The
objective of this programme was to develop employees’ potential on conceptual thinking, judgement and empathy. The
learning modules included a business project dubbed as the ‘Dagang Challenge’, leadership journey sharing session by the MD/
CEO, coaching sessions and an external visit to Genovasi, the only design thinking school in Malaysia.
135
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BUSINESS OVERVIEW
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ACCOUNTABILITY
FINANCIAL STATEMENTS
SHAREHOLDERS’ INFORMATION
INSPIRING CHANGE
EXECUTIVE AND NON-EXECUTIVE CAPABILITY DEVELOPMENT
Technical Managers Capability Assessment
TMCA was rolled out to evaluate the functional capability of
Technical Managers in managing operating assets using a
set of functional skills in discharging their roles and
responsibilities effectively.
For the rollout, the functional skill set was developed in
collaboration with Technical Capability Management
PETRONAS and PDB’s discipline resource persons. The
assessment commenced from September to October 2015,
whereby 10 Terminal Managers were assessed and
development plans identified for gap closure purposes.
PDB Downstream Grounding Programme
The PDB DGP is a structured and systematic training
approach for Technical Executives under the Process
Technology/Operations Skill Group with the objective of
capitalising tacit knowledge and developing their skills in
preparing them for bigger roles in the organisation. DGP is
expected to contribute higher value creation towards
operational excellence.
PDB adopted the DGP to replace the former Management
Trainee Programme that was implemented in 2013. The
programme was adopted from Downstream Business,
PETRONAS and further customised to suit PDB’s Terminal and
Depot Operations.
In developing the modules, a working committee was
formed comprising discipline resource individuals from the
business lines, in collaboration with Downstream Capability
Unit. The team spent five months reviewing the current
DGP logbook and Competency Level and Evaluation. The
revised PDB DGP was approved on 24 September 2015. A
handing over ceremony was conducted on 8 October 2015
between Head of HR Downstream and the MD/CEO. The
programme is also seen to be able to “jumpstart” the
participants’ learning journey as evidenced from the previous
programme participants from the Downstream Business
who yielded commendable Accelerated Capabil ity
Development baseline results which thereon accelerated
their capability development in PETRONAS. The programme
is scheduled to begin in January 2016.
PDB Sales and Marketing Career Paths
Career Path is a tool which can be used by employees to
chart their career development within an organisation. At
PETRONAS, career paths are available based on the respective
skills segment with clear demarcation between enabler,
business technical and technical professional career paths.
In PDB, executives include those from technical to non-technical background, with majority coming from the non-technical pool. In view of the nature of its business, PDB-specific career paths were developed for the Sales and Marketing Executives to help them acquire the necessary skills for career progression through structured mobility.
SUSTAINABILITYREPORT (continued)
136PETRONAS DAGANGAN BERHAD
KEY MESSAGES
CORPORATE DISCLOSURES
BUSINESS STRATEGIES
LEADERSHIP
FINANCIAL REVIEW
ACHIEVEMENTS
INSPIRING CHANGE
Career path defined seven career opportunities within PDB and relevant functions were identified for employees to acquire functional experiences to progress along the identified career ladders.
Non-Executive Non-Technical Capability
Non-Executives Learning and Development Framework
focuses on NENT employees’ functional and behavioural
capabilities.
Eligible NENT employees are required to undergo NENT
Assessments to evaluate their competencies and readiness
for their next career progression. In preparing them for the
assessment, three Microsoft Solution Programme sessions
involving participants were conducted in March, April and
October 2015. All participants passed and were considered
for promotions.
Non-Executive Technical Capability
PETRONAS Competency based Assessment System is a
structured skill assessment system introduced to PETRONAS
group wide in 2006 for NET employees.
The purpose of PECAS is to confirm the competency of our
NET (Technicians and Operators) through a structured
assessment process covering elements of knowledge, skills
and attitude against PETRONAS Occupational Skills Standard.
Three external verification sessions for the PECAS portfolio
were conducted in the year under review to certify and
recommend the competency levels of the identified
technicians through portfolio verifications. As a result, 95
technicians were certified as competent which is 82.0% of
the total eligible NET employees for the assessment.
PDB Internship Programme
The PDB Internship Programme is designed to provide
undergraduate students with practical experiences which
are related to their academic backgrounds for a duration as
specified by their academic institutions.
For the year under review, a total of 190 students underwent
the internship programme with PDB.
Skim Latihan 1Malaysia/Graduate Employability
Enhancement Scheme
The Graduate Employability Enhancement Scheme or better known as the SL1M-GEES-PETRONAS, is a soft skills training programme, developed by PETRONAS in collaboration with the Government of Malaysia to enhance the marketability and employability of Malaysian graduates under the Skim
Latihan 1Malaysia initiative.
The training programme is focused on helping unemployed
graduates acquire critical soft skills and provide them with
an experiential learning experience that equips them with a
diverse set of personal attributes in preparing them to work
in business/corporate environment. For the year under
review, 10 trainees from GEES/SL1M programme were
placed in PDB.
PDB Executives Action Team
Established in 2014, the PDBeat was designed to create
additional value to the Company. This was carried out via
operational improvements as well as activities that
strengthened the brand and improved organisational culture.
P
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