MANILA, Philippines — Petron Corp., the country's largest oil refiner, swung to a net loss in the first half after tough stay-home orders enforced at home and abroad to curb coronavirus infections sent world oil prices crashing amid anemic demand.
In a disclosure to the stock exchange on Tuesday, Petron reported it incurred a net loss of P14.2 billion from January to June, a reversal from a P2.6-billion net income in the same period last year.
The company said its red-ink stained balance sheet was due to worldwide lockdowns that "resulted in an unprecedented demand destruction which led to a sustained drop in oil prices, reaching record low levels in 26 years."
"We continue to improve our productivity and reduce our expenses to help the company cope with COVID-19’s impact," Ramon Ang, company president and chief executive, said.
"At the same time, we initiated cash preservation initiatives and prudently manage our capex," Ang added.
According to Petron, Dubai crude — used as a benchmark for Asia — collapsed by almost 70% from January to April to $13 per barrel due to depressed global demand, translating to lower local pump prices and refining margins. To make matters worse, a three-month lockdown in Luzon and other provinces outside the main island kept people out of roads, weakening demand for fuel.
As a result, Petron's consolidated revenues plummeted 40% year-on-year in the first six months to P152.4 billion, with local sales volume dropping 28% due to "reduced consumption, particularly in aviation and retail." Including its Malaysian operations, Petron sold 41.9 million barrels of fuel during the period, down 19% annually.
Looking forward, Ang said Petron forecasts "modest gains from inventory of about P3.5 billion in the second half of the year as prices start to recover."
"As the economy slowly reopens, we will need to find new ways to adapt to these new and unprecedented economic realities and remain resilient," he said.
"Just as we have survived many hardships in the past, we know we can rely on our strong corporate culture to pull us through this most challenging period,” he added.
On Tuesday, shares in Petron climbed 1.32% to P3.06 each, tracking a 1.04-percent upswing in the main index.