Petron profit down 70%

Petron Corp. saw its profit drop 70 percent to P3.6 billion in the first three quarters, as the country’s leading oil company still reels from the impact of the months-long shutdown of its refinery in Bataan early this year.

Petron, which supplies about a third of domestic demand, said it still managed to get a “modest” net income because of its efforts to “keep the business viable under the current volatile market condition.”

The profit decline was blamed on the “prolonged depressed refining margins in the region and the refinery shutdown.”
Its refinery, which has a capacity of 180,000 barrels per day, had an emergency shutdown in April due to a strong earthquake that rocked parts of Luzon. The plant resumed normal operations in early August.

The temporary shutdown resulted in a 7-percent drop in Petron’s sales volume which pulled down the company’s consolidated revenue.

Consolidated revenue in the first nine months dropped 9 percent year-on-year to P381.7 billion in the first nine months of the year. The 2-percent volume increase in Malaysia—where Petron opened 38 new service stations from January to September this year—helped cushion the drop.

The company has been expanding its presence despite the challenging market. In the first three quarters of the year, it opened more than 100 new stations in the Philippines, expanding the local network to over 2,400 stations, still the largest in the country.

The company’s bottom line has been declining since the start of the year, which had Petron butting heads with the Department of Finance over whether or not the higher fuel excise taxes under President Duterte’s first tax reform package should also be blamed.

Its lackluster performance drew comparisons with its wholly-owned subsidiary, Petron Freeport Corp. PFC, which posted a 14-percent increase in its consolidated revenue and a 20-percent rise in net income in the first semester. PFC manages its stations inside Subic Freeport Zone.

It should be noted that, under the current rules, enterprises like service stations within freeport zones such as Subic do not pay local and national taxes, including excise taxes.

In the same statement, Petron President and CEO Ramon S. Ang hoped for a level playing field in the country, as he backed the government’s fuel marking program which aims to make sure that oil firms pay the proper taxes.

“This level playing field is what we hope will prevail in the entire country once the fuel marking program is in place. We fully support and look forward to its implementation but at the same time, we reiterate that this mechanism will only work if all players go by the same rules,” he said.