Petron sees improved output, margins
Petron Corp. expects improved margins from this year despite the lingering weakness in oil prices.
Company president and CEO Ramon S. Ang told reporters that ongoing improvements in the oil firm’s refinery will enable it to boost margins from an average of $1 per barrel to about $10 per barrel.
While he declined to specify a guidance on income and revenue levels, he said the company’s growth outlook would be “much better.”
In terms of sales, Ang said there may not be much improvement although price drops in the international market are expected to be tempered starting this year.
“Last year, from $110 per barrel, prices fell $60 per barrel but we still earned P3 billion. This year even if prices fall from the current $60 per barrel to $50 per barrel that would not be much loss to us,” Ang said.
Output from Petron’s refinery, which is undergoing an upgrade, will improve by 50 percent (from 120,000 barrels average per day to 180,000 barrels) by the time commissioning is completed next year.
“This year is still the commissioning period and we think actual commercial production will come next year,” Ang said.
Even so, there are already improvements in output starting this year with commissioning already at 80 percent, Ang said.
Another way the company is coping with lower prices is by increasing its network, targeting to add 200 to 300 stations per year.
Petron put up only 120 new stations last year due to permitting challenges, but there will be improvements in managing applications starting this year, Ang said.
Profitability at the country’s largest oil refiner and retailer fell sharply in the first quarter because of lower fuel prices.
In a disclosure to the Philippine Stock Exchange, Petron Corp. said it earned P257 million in the January to March period, an 88 percent drop from the P2.225 billion in the same three months of last year.
Petron said its income would have been higher if not for an inventory loss of P3 billion. Dubai crude averaged $52 a barrel in the first quarter of this year, or half the $104 a year ago.
Sales volume rose 10 percent to 22.9 million barrels this year from 20.7 million last year, with Philippine volume alone increasing 20 percent to 14.3 million.
This was on account of Petron’s retail expansion program, with the company adding 300 service stations to its 2,800-strong network in the Philippines and Malaysia.
But given weak prices, the company’s revenue declined by 31 percent to P86.7 billion this year from P125.1 billion in 2014.