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Petron suffers ₱4.9-B net loss in first quarter

By Myrna M. Velasco

Leading oil industry player Petron Corporation bled red in the first quarter with an agonizing net loss of ₱4.9 billion, a reverse of the ₱1.3 billion net income it logged in the same period last year.

The oil firm primarily attributed the dismal financial performance in the period to “significant inventory losses as prices collapsed due to demand contraction in both the local and international markets.”

Petron cited in particular the precipitous slide in prices which was at the level of US$67 per barrel in December; then plummeting to US$23 per barrel by end-March this year following the imposition of country-lockdowns in many parts of the world that had in turn restricted people’s movement and stalled economic activities.

As propitiously noted by Petron President and CEO Ramon S. Ang, “the entire industry is going through a rough phase because of Covid-19’s impact on oil demand and prices,” and with that he said “domestic consumption has gone down particularly in retail and aviation which is understandable because of travel bans and restrictions.”

On the revenue front, Petron posted 16-percent decline to ₱104.6 billion from January to March this year versus ₱124.6 billion within the same stretch last year.

The company also reported downtrend on sales volume – with the domestic market logging in 26.3 million barrels; while Malaysia had 24.7 million barrels.

Petron said the sales drop had been due to the “sudden and significant drop in fuel demand as both countries imposed strict lockdowns towards the end of the quarter, limiting movement and economic activity, to contain the spread of the virus.”

The oil firm similarly indicated when the enhanced community quarantine (ECQ) was enforced in the country, some of its stations “have temporarily closed or shortened their operating hours due to the lesser number of vehicles on the road.”

And on May 5, the company’s refinery in Limay, Bataan had been placed on “scheduled turnaround to give way to maintenance activities on major process units.” The maintenance downtime, it explained, “will mitigate the impact of low fuel demand and poor refining margins.”

In the interim, the oil firm said it could still satiate customer demand because it has enough inventory, and when needed, supply has to be replenished with finished product imports.

With the infirmity of the situation given the continuing pneumonic plague of the coronavirus, Petron said it will be implementing “strict cost-saving and cash conservation measures,” as it activated its business contingency plan to cope with the lingering crisis.

Ang stressed “business is challenging,” hence, he indicated that the company needs “to be more prudent in managing our resources while ensuring that the needs of our customers are still met.”

The Petron chief executive opined that “demand recovery will depend upon the lifting of the quarantine measures and ultimately, finding a vaccine to fully restore mobility.”

He added that “while we are hopeful for a swift recovery, we know that these are things we cannot rush,” with him emphasizing that “the health and safety of the people is still the most important.”


Source: Manila Bulletin (https://business.mb.com.ph/2020/05/26/petron-suffers-%e2%82%b14-9-b-net-loss-in-first-quarter/)

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