By Myrna M. Velasco
Despite significant drop on its profitability, listed firm Pilipinas Shell Petroleum Corporation made a subsequent announcement that it will pay out an impressive scale of P4.8 billion dividends to shareholders.
The oil firm indicated that the scheduled dividend payments account for 95-percent of its audited net income last year. It has to be noted that Shell’s earnings plummeted to P5.1 billion in 2018 from P10.4 billion the year before.
The company’s board had approved the payment of dividends for April 30 this year – for stockholders on record as of April 5, 2019.
“This surpasses the company’s commitment to maintain a dividend payout of at least 75% and is the highest payout ratio since its IPO (initial public offering) in 2016,” the oil firm said.
Shell Philippines President and CEO Cesar Romero explained that the company generated P14.1 billion cash from operations last year, and that essentially “allows us to not only cover our dividend payments but also to fund P6.0 billion worth of capital expenditures this year.”
The targeted capital spending of P6.0 billion is also seen higher than the P4.0 billion yearly allocation of the company for capex.
Romero expounded “the company is increasing its capital expenditures from P4.1 billion last year to P6.0 billion to support expansion plans of (the) retail business,” adding that such will cover the opening of 50-70 new stations this 2019 at its targeted strategic locations.
Further, the scheduled capital outlay will bankroll projects “in the mid-term to enhance the crude flexibility of the Shell Tabangao refinery,” the oil company stressed.
Shell emphasized that it has been “one of the highest dividend-yielding stocks listed in the Philippine Stock Exchange as the company ended 2018 with a dividend yield of about 6.0-percent.”
For return on average capital, Pilipinas Shell noted that this remained high at 15-percent last year; and that fundamentally demonstrates “the company’s ability to efficiently utilize capital to generate competitive returns.”
It added that “with a healthy balance sheet and gearing of 17-percent, the company continues to be well-positioned to fund growth and sustain its attractive dividend policy.”
By end of 2018, it emphasized that the level of its unappropriated retained earnings had been at sizeable P11.1 billion.
On targeted ventures, Romero said “we are investing in our facilities and infrastructure to deliver strong returns to the public,” primarily the customers that the oil firm has been serving; and on wider spectrum, it shall also cover its investors.