Owing primarily to favorable outcome of its better inventory holdings, major oil firm Shell Pilipinas Corporation posted significant hike of 1,320 percent in its first half net income to P1.7 billion from relatively lean profit of P123 million in the same period last year.

The company indicated that its bottom-line result could have been even better had it not been dampened by the high interest rate and the depreciation of the Philippine peso versus the US dollar.

Nevertheless, for the second quarter, the company’s net earnings declined to P340.4 million from P433.1 million a year ago, primarily due to the “higher interest rate environment” within the last three months.

SPC President and Chief Executive Officer Lorelie Quiambao-Osial noted “our strong first half performance underscores our resilience and ability to deliver value even in a challenging economic environment.”

She added “our strategy is paving the way for improved value delivery and we are sustaining the momentum we started in fourth quarter last year.”

The oil firm further cited improvement in volume sales at the retail segment of its business; as well as prudent cash management as among the factors which contributed to upturn in earnings.

“The company's financial health was further strengthened as it continued its active working capital management and controlled spending, delivering free cash flow (FCF) net of interest expense of positive P1.1 billion versus the prior year’s negative P7.5 billion,” Shell expounded.

On the sales front, Shell highlighted that it registered “high premium penetration in mobility and increased premium product sales across its business-to-business segment,” and that in turn “helped temper the impact of the hypercompetitive industry during the first half of the year.”

Its successful competitive play in the retail segment, the oil firm asserted had been attributed to a “series of targeted marketing campaigns and promotions, which attracted new customers while increasing the basket size of existing patrons.”

In the non-fuel retail segment, the company registered 18% uptick compared to last year’s six-month period, and that had been mainly traced to “increased demand for lubricants and services.”

Further, Shell reported that it posted gains on its decision to pare capital expenditures (capex) to the level of P2.0 billion as against programmed heftier capital spend of P4.0 billion to P5.0 billion annually; and that had been anchored on the firm’s “sharpened focus on high-yielding projects,” which effectively reduced the firm’s gearing from 57 percent to 54 percent.

“A significant contributor to the company's bottom line was the successful implementation of cost-saving initiatives and supply chain efficiencies,” Shell said.

To that end, the company stated that it was able to log “operating expense savings and interest rate avoidance of P0.4 billion,” which is already inching close to its P0.5 billion commitment for the full year.