By Adam J. Ang
PHOENIX Petroleum Philippines, Inc. (Phoenix) reported a P215 million net loss in the first quarter, reversing its P415 million net income recorded in the same period in 2019, as overall revenues and volume declined on volatility in the oil market.
In the first three months of 2020, the fuel company saw its total volumes down 5% despite “strong” growth in its retail and liquified petroleum gas (LPG) segments, while its overall revenues went down by 9% as average selling prices followed that of the decline in global oil prices.
“We were not spared but we were able to navigate the downturn better because of our earlier investments in strategic, higher-margin areas such as retail and LPG,” Phoenix Petroleum Chief Executive Officer Dennis A. Uy said in a statement.
The listed independent oil firm noted a 39% increase in LPG volumes in the January-March period, while its retail volume also went up by 9%, building on the progress of its network expansion last year.
“Our portfolio today is more diversified, with LPG particularly thriving in this pandemic. From a non-essential item in the kitchen, LPG became an essential household product, especially during the Enhanced Community Quarantine (ECQ),” Mr. Uy said.
“Despite the healthy performance of its LPG and Retail segments, the downturn in Commercial business and the unfavorable global oil environment pushed [Phoenix] into reporting a loss of P-215mn for the quarter,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a Viber message.
By March, Phoenix runs 660 fuel stations in the country.
The oil company’s first-quarter performance was “challenged” by the Taal Volcano eruption in January and the global coronavirus disease 2019 (COVID-19) pandemic, along with the government’s lockdown measures, according to Philstocks Financial, Inc. Senior Research Analyst Japhet Louis Tantiangco.
“The said factors have led to lower oil demand as seen in the decline in the sales volume of the company. This, coupled with the lower average selling prices, led to a 9% decline in consolidated revenues,” he said.
The company has kept its inventory levels to half of terminal capacity, alleviating the burden on its working capital.
It has cut cash requirements by P2.3 billion this year, P1.5 billion of which is from capital expenditure reduction and the remaining P800 million is from savings from marketing, advertising, and travel, as it shifted to digital channels.
During Phoenix’s annual stockholders’ meeting last Friday, shareholders approved the company’s initial P57 million capital provision for its upcoming road transport business unit.
They also supported its P4.9-billion investment in Duta, Inc., Phoenix’s property holding subsidiary, over the next three years.
“Moving forward, with the longer quarantine periods in the [second] quarter, together with the depressed international oil prices including the plunge in April, we may see further weakness in [Phoenix’s] upcoming financial results,” Mr. Tantiagco said.
Separately on Monday, Phoenix named Henry Albert R. Fadullon as its new president, a position previously held by the company’s founder Mr. Uy.
Mr. Fadullon has served as Phoenix’s chief operating officer since 2017. Mr. Uy will become the chairman of the board and chief strategy officer.
Phoenix also sought to amend its corporate term to a perpetual existence from 50 years previously.
On Monday, shares in Phoenix fell by 1.91% to close at P11.28 each.