PETRON Corp. returned to profitability in the third quarter and posted a P1.63 billion consolidated net income, which the country’s largest oil refining and marketing company said was largely driven by retailing margins.
“With our judicious use of resources, we are determined to expedite our overall recovery, minimize the pandemic’s impact on our business, and deliver more positive results,” Petron President and Chief Executive Ramon S. Ang said in a press release on Tuesday.
Despite what it called a “modest recovery,” the company said its refining segment continued to incur losses due to thin refining margins.
No comparative figure was released for the period, but the listed oil firm reported last year a consolidated third-quarter net income of P1 billion. In the second quarter this year, Petron suffered losses of P9.36 billion.
The company, which also does business in Malaysia, said consolidated retail volume improved by 48.6% for the July-September period versus the second quarter. It said gas stations started operating under normal hours in August with the reopening of the economy.
“While the oil industry continues to face major challenges, we are beginning to see signs of recovery thanks to our government’s decision to gradually and safely restart the economy,” Mr. Ang said.
“Aside from retail, we can also expect the reopening of local tourism to influence higher demand for aviation fuel, which really took a hit because of the pandemic. We’ve also seen some improvements in Malaysia with a notable upturn in our domestic volume to almost pre-pandemic levels,” he added.
For the nine months to September, Petron incurred a net loss of P12.6 billion, reversing its P3.6 billion net income in the same three quarters last year. It recorded a 43% decline in revenues to P216.4 billion from last year’s P381.7 billion.
Consolidated sales volume from the Philippines and Malaysia shrunk by 24% to 59.5 million barrels from last year’s 78.7 million barrels. In the Philippines, volume surged 33% with most Petron stations operating under normal hours since August.
Petron said its year-to-date performance was hit by the “significant” 40% drop in domestic volume and the P13 billion inventory losses during the first four months of the lockdown.
It said global oil prices remained depressed with the benchmark Dubai crude averaging $41.5 per barrel during the past three months. It added “refining cracks” have barely recovered from a low of $2.20 per barrel in September to current levels of around $2.80 per barrel.
Petron’s quarterly report comes a week after Mr. Ang said the refinery would be closing “very soon,” because of a challenging environment and uneven playing field.
“We have several tax-related concerns, which we have already raised with the government. Under the current regime, refiners are faced with the burden of paying so much more taxes than importers making it more difficult for us to preserve the viability of operating a refinery in the country,” he said on Tuesday.
“Of course, we want to keep our refinery running and hopefully with the government’s support, we will be able to do this more efficiently,” he added.
Petron’s refinery in Bataan, the country’s only remaining oil refiner, has resumed normal operations after being on “scheduled turnaround” since May.
On Tuesday, shares in the company slipped by 0.98% to close at P3.04 each. — A. Y. Yang