MANILA, Philippines—Petron Corp., the country’s biggest oil refiner and retailer, expects to post a double digit growth in its net income in 2011 from last year’s P7.9 billion, despite a downtrend in fuel oil prices.
Ramon S. Ang, chair and CEO for Petron, explained that the optimistic outlook for 2011 was due mainly 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, 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 explained to reporters at the sidelines of the Petron’s stockholders meeting on 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 disclosed that Petron would conduct a share sale (public offering) this year to comply with the listing requirement of the Philippine Stock Exchange that the minimum public float should be at least 10 percent.
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.
Ang declined to cite the amount they have been expecting to raise from the planned offering as this would depend on market appetite. But part of the proceeds from this share sale will help fund the aggressive expansion program of Petron.
Over the next three years, Petron plans to earmark $2 billion (roughly P86 billion) for its capital intensive projects, including the planned upgrade of its 180,000-barrel-a-day refinery and petrochemical business in Bataan, and 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 would thus allow the company to produce more special types of gasoline and other oil products for the Filipino consumers, he added.
For this year alone, Petron was reported to have earmarked P31 billion for its capex program.