Shell profit slides on refinery shutdown, softer oil prices

MANILA, Philippines - Pilipinas Shell Petroleum Corp. booked lower profit in the six months to June this year, pulled down by its scheduled refinery shutdown and softer global oil prices in the second quarter.

Royal Dutch Shell’s local unit registered a net income of P4.2 billion during the first semester, a 17.4-percent slide from P5.07 billion in the same period last year.

The drop in net earnings was mainly caused by its refinery preventive maintenance shutdown during the last two months of the second quarter and lower inventory holding gains from softer global oil prices.

The oil firm shut down its refinery in Tabangao, Batangas for preventive maintenance activities around May 6 and resumed production operations on July 8. This was done to ensure the continuing safety and reliability of the plant.

Meanwhile, the firm’s financial report showed it registered pre-tax inventory holding gains of P437.2 million as of end-June 2017, which is roughly 20 percent of last year’s P2.06 billion.

However, Shell said the solid operational performance and reliability of the Tabangao refinery from January to April, plus strong refining margins during the period mitigated the impact of the preventive maintenance shutdown.

 “The safe and successful completion of the preventive maintenance program on the Tabangao refinery, combined with better freight optimization via the North Mindanao Import Facility in Cagayan de Oro brings added robustness to the company’s integrated supply chain and assures the reliable supply of quality fuel products to its customers,” it said.

In terms of revenues, net sales increased 25 percent from P66.01 billion to P82.24 billion, attributed to growth from retail sales volume driven by successful marketing promotions and growth from new retail stations.

Retail network sales volumes grew approximately six percent in the second quarter following the successful Summer Charged promo and the launch of the company’s new V-Power performance and efficiency fuels with Dynaflex technology.

Shell also inaugurated its 1,000th retail site in May as part of its network expansion plans.

Meanwhile, its non-fuels retailing business grew versus last year, with convenience retailing showing double-digit growth compared to the prior quarter due to new Deli2Go® shops and newly-renovated Shell Select stores.

During the first half, the company opened 20 Shell Select stores and nine new Deli2Go® shops including its first stand-alone Deli2Go® outlet, demonstrating its continuing belief in the growth prospects of the QSR sector in the country.