Pilipinas Shell Petroleum Corp., the smaller of the two oil refineries in the country, posted a net income of P7.6 billion in the first nine months of the year, up 50 percent from P5 billion year-on-year, despite sharply lower sales.
Pilipinas Shell said in a filing with the Securities and Exchange Commission that lower foreign exchange losses amid a relatively stable peso in 2009, improved competitive costs and a reduced corporate income tax contributed to the company’s higher profits.
Net sales in the nine-month period plummeted to P98.99 billion from P151.42 billion on year. Cost of sales also dropped to P81.2 billion from P138.7 billion in 2008.
Pilipinas Shell implemented a change in pricing strategy to week minus 1 effective Jan. 1, which means the company reflected the previous week’s international product prices in retail outlets, regardless if the adjustment translates into an increase or rollback.
“The company expects adverse impacts on its financial results for the full-year 2009, with the imposition of Executive Order 839, which puts a price freeze on petroleum product prices at the retails in the islands of Luzon,” Pilipinas Shell said.
Pilipinas Shell this year is spending P2 billion in capital expenditure mainly for maintenance work, equipment and tank replacement, the expansion of service stations and the support of its retail, lubricants and LPG business.
Pilipinas Shell, incorporated in the Philippines and registered with the SEC on Jan. 9, 1959, is primarily engaged in the refining and marketing of petroleum products.
The company is 67 percent owned by The Shell Petroleum Co. Limited, a firm registered in the United Kingdom, and 33 percent held by Filipino and other foreign stockholders. Its parent company is UK-based Royal Dutch Shell Plc.
Pilipinas Shell operates an oil refinery in Tabangao, Batangas and several oil depots and installations across the Philippines. The company has 858 employees as of end-September.
Petron Corp., the bigger refiner, earlier reported a net income of P3.37 billion in the first nine months, up 21 percent from P2.784 billion year-on-year.
Petron said the strong financial position in the nine-month period was bringing back the company to full recovery from its record loss of P3.9 billion last year.
Petron, however, said its financial position started to deteriorate as a result of Executive Order 839, which froze retail prices of fuels in Luzon at their Oct. 15 levels until late November.
It said it expected to lose around P100 million in October and over P1 billion for the full fourth quarter if EO 839 was not lifted shortly.
Petron said the projected loss could be higher if international oil prices rose beyond forecast levels in the coming weeks.
Petron’s revenues for the first nine months fell on-year mainly because of lower selling prices of petroleum products. Sales dropped to P123.63 billion from P216.43 billion last year. Cost of goods sold during the period declined to P111.6 billion from P205.1 billion. –Jenniffer B. Austria, Manila Standard Today
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