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Shell posts ‘shocking’ ₱5.5-billion loss in Q1

By Myrna M. Velasco

Listed firm Pilipinas Shell Petroleum Corporation ended up in a petrifying net loss of ₱5.5 billion in the first quarter this year, a shocking reverse of the ₱2.4-billion income it logged in the same January-March stretch last year.

The crash in its financial performance, according to the oil company, can be attributed to “the collapse in global oil prices coupled with the slowdown in economic activity under a government-imposed quarantine due to the coronavirus disease.”

Shell qualified its pummeled financial outcome “comes on the heels of an 11 percent growth in profit by end-2019, despite deteriorating oil refining margins in the region.”

Within this year’s first three months, the oil company said its inventory holding losses (net of taxes) had been considerably substantial at ₱5.6 billion as crude prices nosedived from $67 per barrel at the start of the year then to the level of US$26 per barrel by end-March, primarily due to “the breakdown of production cuts discussion between OPEC (Organization of the Petroleum Exporting Countries) and Russia.”

Despite the Taal Volcano eruption in January and prior to the lockdown enforcement in March, Shell said its marketing volumes had been on slight uptrend of 6.0 percent; but this drastically plunged by 34 percent during the second half of March.

On the commercial segment, Shell noted that sales was on upswing of 16- percent pre-enhanced community quarantine (ECQ), due to increasing volume penetration on its premium fuels.

Pilipinas Shell President and CEO Cesar G. Romero regrettably noted that the firm’s “first quarter loss is disappointing given our robust overall performance last year and the strong market delivery from the start of 2020 until mid-March.”

He nevertheless asserted the company “will overcome this challenge the same way we surmounted the various crisis and upheavals during our 106-year legacy in the Philippines.”

By far, Romero said Shell had already taken “prompt action to reinforce financial strength and resilience of our business, leveraging on the flexibility of our supply chain and prudent balance sheet management over the past years.”

The oil firm indicated it has been enforcing “cash conservation measures and aggressive working capital management in response to the drastic decline in demand during the pandemic.”

For one, it emphasized that from ₱500-million savings in operating expense announced in March, the company management strived to double the targeted savings to ₱1.0 billion out of “various cash preservation initiatives.”

On programmed capital expenditure (capex), this was likewise trimmed by 25 percent or around ₱1.0 billion. At the same time, the company informed its employees ahead that they “will not be receiving discretionary performance-related bonuses” this year.

 


Source: Manila Bulletin (https://business.mb.com.ph/2020/05/14/shell-posts-shocking-%e2%82%b15-5-billion-loss-in-q1/)

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