Volatile oil prices cut Petron’s 9-month profit by 88%

MANILA, Philippines – Petron Corp, the country’s biggest oil retailer and refiner, cited the volatile global oil markets for its P932 million net earnings in the January-to-September period, an 87.8% drop from a year ago.

In a press statement on Monday, November 12, Petron did not cite comparative 2011 figures, but previous disclosure showed a P7.6 billion net income in 2011’s first 9 months.

The cumulative earnings this 2012 was mostly from the 3rd quarter, when Petron earned P500 million–a big jump from the P2.1 billion loss in the second quarter but still just a third of the P1.55 billion it earned in the comparative quarter in 2011.

“The company continued to experience depressed margins because of volatility in global oil markets in the 2nd and 3rd quarters of 2012,” Petron said in the statement.

Petron said it was forced to sell inventory at lower prices when prices of crude oil and finished products dropped in the first 6 months–a result of the global economic slowdown due to the eurozone crisis and slower growth of US and Chinese economies.

These factors beyond Petron’s control overshadowed its healthy performance in the domestic and international market. During the first 9 months, it posted a P307.3 billion consolidated revenues, a hefty 52% increase from a year ago.

Domestic sales was up 9% to 33 million barrels, translating to P212 billion.

“Despite the challenging market conditions, we remained focused and followed through with our strategic initiatives that will ensure the long-term growth and profitability of Petron,” Ramon S. Ang, Petron chairman and chief executive, said.

Malaysian operations

Its newly acquired Malaysia operations contributed P155 million to the consolidated income in the first 3 quarters.

The Malaysia-based pumps and refinery, which were consolidated beginning the 2nd quarter, contributed 17.6 million barrels in volumes and revenues of P94.9 billion.

Petron has begun converting Esso and Mobil service stations to the Petron brand.

Petron aims to rebrand 560 service stations over the next few years.

Limay plant

Petron also reported that Units 1 and 2 comprising half of its 216 megawatt (MW) co-generation power plant in Limay, Bataan will be operational within the first half of 2013.

Petron said the facility will give the refinery a more economical power source and improve steam supply.

Petron also noted that the Refinery Expansion Project (RMP-2) is scheduled for mechanical completion in the first half of 2014 with commercial operations targeted for the 4th quarter of the same year.

Petron said the project will allow the “conversion” of all negative margin fuel oil into higher value products such as gasoline, diesel, and various petrochemicals.

This will help supply the demand for these products as the Philippine economy grows, it stressed.

Petron is one of the business units of diversified conglomerate San Miguel Corp. – Rappler.com