The Edge - November 23, 2009 - Just as Petronas is known for its heart-warming television commercials produced by the late film-maker Yasmin Ahmad during festive seasons, its domestic arms Petronas Dagangan Berhad (PDB) is associated with the warm drinks its offers highway users during the nation’s various ‘balik kampung’ exodus.

The campaign is just one ways in which Petronas Dagangan, the consumer-facing subsidiary of the national oil corporation, engages consumers. PDB’S ‘Coffee Break’ campaign also has corporate social responsibility built into it- it aims to reduce traffic accidents caused by tired drivers by encouraging motorists to take a break. In September, PDB celebrated the 10th anniversary of the campaign by giving away free snacks and other beverages besides coffee. Up till last year, PDB has given away more than eight million cups of coffee.

The past year has not been easy for PDB which has key business in retail, industrial, liquefied petroleum gas and lubricants. The global economic crisis, coupled with the volatile price of petrol, affected the company’s earnings. Crude oil prices plunged from a high of US$145 (RM489) per barrel in July last year to a low of US$50 per barrel in March this year.

In line with the government’s ruling, PDB introduced the RON95 petrol grade at RM1.75 per litre on Sept 1 this year. HwangDBS said in July 28 report that this would not affect PDB’s earnings as it would continue to earn soame fixed margin under automated pricing mechanism formula. However, the research firm estimated that PDB’s overall sales volume would further decline in FY2010 by 1.7% to 12.3 billion litres after dropping by 6.6%to 12.5 billion litres in FY2009.

Petronas Dagangan Bhd’s net profit for FY2009 ended March 31 fell 12.8% to RM581.8 million compared with RM667.8 million in the previous year, but in maintained its position as the market leader in the domestic petroleum product industry with a market share of 42.5%. For its IQ2010 ended June 30, it reported 11.56% y-o-y decline in net profit to RM205.36 million while revenue dropped 29.08% to RM4.78 billion.

Despite the challenging economic climate, PDB continues its outlet expansion. In July, the petrol retailer announced that it would be adding 30 petrol stations by the end of FY2010 to its existing 920 stations.

On Feb 19 this year, PDB opened its first standalone Mesra convenience store, “Mesra Shoppe”, in Universiti Teknologi Petronas in Tronoh, Perak. For the rest of the year, PDB expects to open another 20 standalone store, managing director Mohd Sabarudin Mohd Amin said in July 28 press release.

Apart from station expansion and new store openings, Petronas Dagangan kept brand visibility trough various initiatives such as contests, Formula One carnivals and community programmes. Revamping its loyalty programme whereby it demerged from RealRewards to offer its own loyalty card has also raised brand visibility. In May this year, it introduced the Petronas Mesra Card, which comes under Petronas Mesra Loyalty Programme.

Last year, the company introduced the Petronas CIMB MasterCard and Maybankard Visa credit cards. The good reception to both led PDB to introduce Islamic versions-CIMB Islamic MasterCard and Maybank Islamic Ikhwan Visa.

On the motorsports front, the Petronas brand has received a great deal of international exposure through PDB’s and Petronas Motorsports’ collaboration as premium partner for the BMW Sauber F1 Team. Although the deal ended following BMW‘s decision to pull out F1 at the end of the 2009 season. Petronas said earlier this month it would continue to be the title sponsor of the Petronas Malaysian F1 Grand Prix, which has proven to be an effective platform to promote Malaysia on the global stage.

The national oil corporation said its participation and investment in F1 and other sports had always been based and built on partnerships that provided direct support towards its business expansion, while complementing international branding efforts.

PDB is also partnering the Petronas Adventure Team (4x4) and Petronas Sprinta-AAM Malaysian Club Prix Championship.

In a press release announcing its IQ2010 results in September, PDB said while demand conditions would be challenging, it expects to maintain its market leadership position with continuous strategic marketing efforts and initiatives.