Petron incurs P11.4 billion loss in 2020

MANILA, Philippines — Petron Corp. incurred a net loss of P11.4 billion last year, but it expects to recover this year as fuel demand increases.

Last year’s P11.4 billion net loss compares to  a net income of P2.3 billion in 2019.

Full-year consolidated sales volume stood at 78.6 million barrels, down 27 percent from 107 million barrels in 2019.

Revenues declined by 44 percent to P286 billion, reflecting the impact of the pandemic on Petron’s financial performance.

Petron, however, noted that its second half financial numbers showed signs of recovery.

In the fourth quarter, the oil firm registered consolidated revenues of P69.6 billion, marking two straight quarters of growth after experiencing a historic slump in the second quarter due to the pandemic’s economic impact.  This represented a 46 percent increase from the P47.7 billion reported in the second quarter, Petron’s hardest hit quarter last year.

Petron also saw consolidated sales volume reach 19.08 million barrels during the quarter despite the general community quarantine (GCQ) extension in key cities in the country and another conditional movement control order in Malaysia. This marks a 6.6 percent increase from the second quarter sales of 17.9 million barrels.

As a result, Petron posted a consolidated net income of P1.2 billion in fourth quarter due to increased volumes and inventory holding gains as prices began to rally towards year-end.

However, refining margins remained soft which challenged the economic viability of the company’s Philippine operations.

“We have been working hard to minimize the impact of the pandemic on our business and our performance in the second half of 2020 proves that we are moving in the right direction. We look forward to sustaining our recovery as we anticipate higher demand and a more stable industry situation with an end to this crisis finally in sight,” Petron president and CEO Ramon Ang said in a statement.

The compan looks forward to significant demand recovery this year and plans to resume refining by the second half of the year.

“We continue to implement various cost saving efforts but tax efficiency is another critical area that should improve. Our AFAB registration will help make our refining business more competitive and financially viable as soon as demand recovers,” Ang said.

Petron’s 180,000 barrels per day refinery—the only remaining refining facility in the country—produces high-value petroleum products and petrochemicals capable of supplying 40 percent of domestic demand.

The Bataan refinery was shut down in May last year to give way to maintenance activities on major process units and to mitigate the impact of low fuel demand and poor refining margins. It resumed operations in October.

Petron again placed its Bataan refinery on economic plant shutdown in February “considering that the refining business remains challenging both here and around the world.”

The shutdown proceeded even after the Authority of the Freeport Area of Bataan (AFAB) approved in December Petron’s application to make its Bataan refinery one of the registered enterprises of the freeport zone.

FAB-registered enterprises are entitled to avail of fiscal incentives under Special Economic Zone Act of 1995 or Omnibus Investment Code of 1987. This will benefit the company in the form of better timing on the payment of VAT which shall be upon withdrawal of the products from the refinery.