With additional valuation-anchored inventory losses and one-off charges booked, the net loss of listed firm Pilipinas Shell Petroleum Corporation (PSPC) had widened to P13.9 billion in nine months this year.
That’s a complete reversal of the P4.4 billion net income it posted last year, when oil prices were at more predictable state and there had been no pandemic-induced uncertainties disrupting oil markets.
It specified that if the P5.7 billion inventory valuation losses had not turned up, the company’s net loss in the third quarter should have been at leaner P700 million versus P900 million in the second quarter.
And without the one-off charges that stood at P7.5 billion, the oil firm’s net loss should have been trimmed to P6.4 billion within the January-September stretch. The one-off charges came about because of the closure of its refining operations that subsequently prompted the conversion of its Tabangao facility into a world-class import terminal.
But while the company works on improving its financial performance in the coming months, Pilipinas Shell President and CEO Cesar G. Romero announced that they will be re-investing roughly P1.0 billion in the next few years “to fully transform Tabangao into a world class facility that will support its marketing growth aspirations.”
Part of the company’s major step this year is to set on stream the commercial operations of its 54-million liter capacity terminal in Subic to underpin its supply chain, primarily to serve the demand of its Northern Luzon customers; while its Tabangao import facility will cater to the needs of customers in other parts of Luzon and Northern Visayas. To complete the loop, its Northern Mindanao Import Facility (NMIF) in Cagayan de Oro will be supporting the rest of Visayas and well as customers in Mindanao.
Pilipinas Shell said it now “has a more resilient network of three medium-range import terminals with sufficient finished products capacity to effectively serve the demands of customers nationwide.”
The firm indicated that despite the challenges, it prioritized business strategies that shall result in cash preservation for the company. As of third quarter’s end, the savings logged by the company stood at P2.5 billion; and this is seen sustained at the level of P2.0 billion until the end of this year.
“Savings of P1.2 billion were generated from OPEX (operating expenses); with P1.3 billion from CAPEX (capital expenditure),” Shell emphasized.
While the company still navigates the tough terrain of business induced by the coronavirus pandemic, Romero asserted their overall frame “remains optimistic,” as he noted that the “government’s efforts to gradually reopen the economy by prudently relaxing quarantine restrictions are slowly giving elbow room for the economy to recover.”
He specified that for Shell, “the wins are coming in gradually as more businesses operate at increased capacity in the areas of manufacturing and transportation.”
The company chief executive expounded “our balance sheet, technical capability and resources are solid; and serve as well in continuing to provide Filipinos with high quality fuel products despite the challenging environment.”
Parallel to the firm’s aspirations for demand and financial rebound, Romero noted they are also making “the right sustainable decision to protect the long-term interests of our shareholders.”
The company’s gearing had risen to 47-percent, and that was mainly attributed to “lower equity from net loss rather than an increase in net debt,” with it emphasizing that “excluding the impact of the refinery one-off charges, the company’s gearing stands at 41-percent.”
Romero indicated “the pandemic has forced us to rethink the way we do things, while ensuring the quality of service that Filipinos expect from us.”