Shell earnings more than triple to P3.5 billion in Q1

MANILA, Philippines — Pilipinas Shell Petroleum Corp. (PSPC) more than tripled its net earnings in the first quarter on the back of the oil price surge and inventory gains during the period.

In its quarterly report, PSPC said it registered a 245 percent surge during the period from P1.02 billion last year to P3.53 billion this year.

It registered inventory holding gains of P2.99 billion across its supply chain in the first quarter.

But in terms of core earnings, the local unit of Shell nearly halved its recurring income from P1.02 billion to P528.2 million due to weaker marketing volumes from new government-imposed mobility restrictions to combat the Omicron surge and price exposures borne by marketing businesses due to increasing product prices.

PSPC said net sales jumped by 48 percent to P59.07 billion primarily due to higher pump prices driven by the general increase in global oil prices. But in terms of volume, sales were lower by 2.8 percent to 970.3 million liters.

Cost of sales also expanded by 50.8 percent to P51.17 billion.

This drove gross profit to increase by 32 percent to P7.89 billion mainly due to high premium fuel penetration, and inventory gains as a result of higher global oil prices.

In a statement, PSPC said it maintains a high fuel premium penetration of 29 percent, sustaining the strong position of its Shell V-power brand as the most preferred fuel brand in the country.

The company said its cash conservation measures remain a priority amid volatile global oil prices, delivering positive cash flow from operations at P0.1 billion, and cash flow from operations excluding working capital at P5.9 billion during the quarter.

It also kept borrowing levels controlled despite the increase in working capital requirements driven by a significant build-up in inventory cost.

“Pilipinas Shell remains steadfast and committed to our strategy of powering progress for the country, especially as opportunities are opening with a recovering economy,” PSPC president and CEO Lorelie Quiambao-Osial said.

“Customer-centricity, innovation, agility, and our initiatives for sustainable energy are all designed to meet our expanding customers’ current and future needs with the resurgence of safe mobility,” she said.

PSPC said its lubricants business saw a 12 percent volume increase while premium sales volume rose by 24 percent amid the pandemic.

Aviation sales volume also bounced back with a 74 percent growth year-on-year as domestic and international borders open both for passenger and cargo flights.

PSPC intends to accelerate its strategies throughout this year by growing and continuing to invest in and responding to the growing energy needs of the Philippines.

Last month, the company broke ground for its fourth world-class medium range vessel capable import terminal in Sta Cruz, Davao which aims to strengthen the existing value chain as well as support the growing energy needs in Southern Mindanao area.

The terminal also enhances the company’s responsiveness and reliability during typhoons and natural calamities with its three other import terminals located in Batangas, Cagayan de Oro, and Subic.

For this year, PSPC has set a capital expenditure budget of P3 billion to P4 billion  to build new mobility service stations and  improve existing supply and distribution facilities.