PETRON CORP., the country’s biggest oil refiner and retailer, expects to post double digit growth in its net income this year from last year’s P7.9 billion, despite a downtrend in fuel oil prices.
Ramon S. Ang, chair and CEO of Petron, explained that the optimistic outlook for 2011 was due to the better performance of its petrochemical business.
“I’m sure (this year’s net income is) better than last year. We’re earning more from the petrochemical business—particularly the export of polyethylene, propylene, benzene and xyline. The petrochemical side is the one giving us the upside. I think the petrochemical side gives us at least a 30-percent boost in our income,” Ang told to reporters at the sidelines of Petron’s stockholders meeting Tuesday.
Ang further said that Petron’s fuel business would actually post a flat growth given the volatility of crude prices.
“When (crude price) drops, you incur losses because of long inventories, and when it increases, you cannot increase prices immediately,” he added.
Meanwhile, Ang also revealed that Petron would conduct a public offering this year to comply with the 10-percent minimum public float requirement of the Philippine Stock Exchange.
The planned share sale will increase the publicly held shares of Petron from the current 7.5 percent.
“We’re still studying (the planned share sale) and the timing. We have only proposals as of now. We are in talks with some banks for a possible placement, including Standard Chartered Bank, UBS, Goldman, ATR, Security Bank,” Ang explained.
He declined to cite the amount they expect to raise from the planned offer because this would depend on market appetite. But part of the proceeds from this share sale would help fund the expansion of Petron.
Over the next three years, Petron plans to spend $2 billion (roughly P86 billion) for its capital intensive projects, including the upgrade of its 180,000-barrel-a-day refinery and petrochemical business in Bataan, apart from the expansion of its retail network.
With the Refinery Master Plan (RMP)-2, Petron would be able to convert the remaining black yields at the refinery into higher-margin white products.
This move will allow the company to produce more special types of gasoline and other oil products for Filipino consumers, Ang said.
For this year alone, Petron has reportedly earmarked P31 billion for capital expenditures.