Mandaluyong—(PHStocks)—Despite the slump in global oil prices, the Philippines’ leading oil refining and marketing company Petron Corp. (PSE: PCOR) reported a consolidated net income of PhP6.3 billion in 2015, more than double the previous year’s earnings of PhP3 billion. This was driven by a surge in sales volumes, better refining margins, and effective risk management.
All business segments in Petron’s Philippine and Malaysian operations contributed to volume growth as combined sales volumes reached 98 million barrels in 2015, a 13% growth from 2014’s 86.5 million. In its home market, Petron increased sales with strong demand coming from reseller, industrial, and LPG segments. Volumes from service station sales grew by 11% while LPG grew another 16% over the period compared to 2014. Meanwhile in Malaysia, the Company’s rebranding and upgrading program reaped dividends. Retail gasoline volumes, for instance, grew by 11%.
Even with robust volume growth, 2015 registered lower sales revenue of PhP360.2 billion, a 25% decrease from PhP482.5 billion the previous year due to a near 50% drop in oil prices. Benchmark Dubai crude averaged US$51 per barrel last year from US$97 the previous year. Dubai is currently averaging around US$30 per barrel. The Company’s performance was bolstered by proactive risk management to mitigate the impact of inventory losses and currency depreciation.
Despite weak oil prices in 2015, the differential between crude and finished products remained strong and the mix of higher value products improved, supporting refining margins. As a result, Petron’s operating income reached PhP18.1 billion last year, a 138% increase from only PhP7.6 billion in 2014.
“Petron beat expectations and posted solid results last year. Low domestic prices and continued growth in the Philippine and Malaysian economies, coupled with our strategic investments, enabled us to reach record-breaking sales volumes,” Petron President Ramon S. Ang said. “We are right where we want to be as we continued to grow our business profitably and sustainably.”
Petron’s sales performance in the Philippines was supported by the initial test run and commissioning of its $2-billion refinery upgrade project in 2015. In preparation for full operations this year, Petron’s refinery has hit a utilization rate of nearly 90% with an average run of nearly 160,000 barrels per day in the first two months of 2016.
The company also continues to aggressively expand its service station network in both countries to push more profitable domestic sales. As of end 2015, there are over 2,200 stations in the Philippines and another 570 in Malaysia.
“We are definitely on track to deliver better results this year as we reap the benefits of our expansion and upgrading projects. We are well-positioned to take advantage of business opportunities in the downstream oil industry and sustain our growth momentum,” Ang concluded.