Petron sales up, income down on price rollbacks

MANILA, Philippines–Petron Corp., named by Platts as one of the fastest-growing energy firms in Asia, saw its sales grow in the third quarter, but found its profits down because of the drop in oil prices worldwide.

The subsidiary of conglomerate San Miguel Corp. reported a 13-percent growth in consolidated revenues from its Philippine and Malaysian operations, generating P379.5 billion in the first nine months of 2014—higher than the P335.9 billion it registered in the same period last year.

But Petron also posted a consolidated net income of P3.2 billion in the first nine months of 2014—down 26 percent from last year’s P4.4 billion, on weak margins as higher priced inventory was sold at lower prices.

Petron managed to keep its overall market leadership in the Philippines with a share of 37 percent thus far. However, its income drop, despite the high sales volume, reflects the challenges faced by fuel traders and retailers worldwide as crude prices continue to decline worldwide. The drop in the prices was due to the US energy boom, which helped boost supply, and the feeble growth of Western economies, which dampened demand.

The benchmark Dubai crude fell from an average of $108 per barrel in June to an average of $97/barrel in September. In the Philippines, this resulted in nine price rollbacks during the period. If the crude price had been stable in the third quarter, Petron’s operating income would have been higher by P1.9 billion.

Despite the present bleakness in the oil market, Petron seems optimistic of its growth prospects in the Philippines and in Malaysia where it recently gained a foothold. Operating in two of the fastest-rising economies in Asia, Petron is well-positioned to further expand and take advantage of Asia’s economic boom, Petron chairman and CEO Ramon S. Ang said in a comment on Petron’s financial position.

Petron ended the third quarter with the announcement that it had completed its $2-billion refinery upgrade in Bataan. The upgrade will allow the company to maximize its 180,000 barrels-per-day capacity, boost production of high-margin products (gasoline and petrochemicals), and refine lower costing crude oil.

“The upgrade will unlock the full potential of our biggest asset and result in a stronger Petron since it will increase revenues, boost production and enhance our refining margins,” Ang said. “But more importantly, it gives us the ability to support the Philippine economy and its growing demand for fuels.”

In Malaysia, Petron is upgrading and rebranding existing service stations with nearly 460 of 550 already converted.

Petron Malaysia is also expanding its retail network with the construction of several new stations, targeting to build around 30 stations this year.