Petron H1 profit drops to P432M

MANILA, Philippines - First half profits of oil industry giant Petron Corp. sank due to losses in local and Malaysian operations.

Consolidated net income declined to P432 million, the company said in a statement late on Thursday.

“This is significantly lower than the P6.04 billion posted over the same period last year due to the P500-million second quarter loss of its Philippine operations and the consolidation of Malaysian operations in the second quarter, which posted a much higher loss of P1.6 billion,” Petron said.

“The substantial margin contraction of both operations was due to the volatility in global oil markets,” it added.

Excluding Petron Malaysia, Petron Philippines recorded P1.99-billion profits in the first semester.

The dampened oil market offset the 43- percent growth in Petron’s revenues to P193.3 billion from P134.9 billion a year ago.

Higher revenues came from the consolidation of Malaysian operations, the oil firm said.

Specifically, the oil industry suffered from a steep and continuous decline in crude oil and finished product prices from April to the first week of July.

This led to 13 consecutive weekly price rollbacks in the Philippines totaling P10.50 per liter for gasoline and nearly P9 per liter for diesel.

Petron’s margins narrowed as higher-cost inventory were sold at lower prices amid lower demand due to the economic slowdown in the United States and China. 

“While we are still seeing some volatility, oil prices have begun stabilizing in the past few weeks as sentiments on the global economy improve,” said Petron chairman and CEO Ramon S. Ang.

Petron’s total domestic sales rose nine percent to 21.81 million barrels in the first half.

Petron said it benefited from slower operations of its competitors that reduced importations to limit inventory losses.

Moving forward, Ang said Petron is focused with initiatives to help ensure growth and profitability over the long-term.

For instance, Petron continued its network development program to establish service stations even in far-flung areas.

To date, there are around 2,000 Petron service stations nationwide, with hundreds more in the pipeline.

Petron claims to be the industry leader in the country with a 38.1-percent market share as of May 2012.

 In Malaysia, the company has begun converting Esso and Mobil service stations to the Petron brand.

Petron targets rebranding 560 service stations over the next few years.

The company’s $2-billion Refinery Expansion Project (RMP-2) at its 180,000 barrel-per-day Bataan Refinery remains on track and is expected to be onstream in the last quarter of 2014.

The project will maximize the Bataan Refinery by converting all fuel oil production into higher margin white products and petrochemicals.

“We believe we have the right initiatives in place and remain optimistic of the company’s prospects,” Ang said.

Conglomerate San Miguel Corp. (SMC) owns 68 percent of Petron, the Philippines’ largest oil refining and marketing company with crude distillation capacity of 180,000 barrels per day and over 1,700 service stations.

SMC, in the last few years, has diversified its core portfolio of food, beverage and packing by expanding its participation in industries such as petroleum, power generation and distribution, mining and infrastructure.