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Petron incurs loss of P11.4 billion as crisis cuts demand for oil

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Image credits: Photo from www.petron.com.

Petron Corp. incurred a net loss of P11.4 billion in 2020, a reversal of the previous year’s P2.3-billion net income, as revenues plummeted by 44 percent to P286 billion.

Sales suffered from a slump in demand, poor refining margins, and collapse in global prices during the period brought about by the pandemic.

Consolidated sales volume stood at 78.6 million barrels, down 27 percent from 2019’s 107 million barrels. Consolidated revenues declined 44 percent to P286 billion from P514.4 billion in 2019, reflecting the impact of the pandemic on Petron’s financial performance.

For the fourth quarter of 2020, Petron posted a net income of P1.2 billion due to increased volumes and inventory holding gains as prices began to rally towards year-end. However, refining margins remained soft which challenged the economic viability of the company’s Philippine operations.

Revenues during the said quarter reached P69.6 billion, marking two straight quarters of growth, after experiencing a historic slump in the second quarter due to the pandemic’s economic impact. The last quarter of the year registered a 46-percent improvement from the P47.7 billion reported in the second quarter, Petron’s hardest hit quarter in 2020.

Consolidated sales volume in the fourth quarter reached 19.08 million barrels despite the extension of the general community quarantine in key cities in the country and another Conditional Movement Control Order in Malaysia.

Petron President Ramon S. Ang said he is optimistic that demand for fuel products will recover this year.

“We have been working hard to minimize the impact of the pandemic on our business and our performance in the second half of 2020 proves that we are moving in the right direction.

We look forward to sustaining our recovery as we anticipate higher demand and a more stable industry situation with an end to this crisis finally in sight,” he said.

Petron, he added, plans to resume refining by the second half of the year after it ceased refining operations last February 10. Prior to this, the Bataan refinery was shut from May to October last year.

Ang said Petron vowed to further improve its competitiveness after it secured approval as a registered enterprise in December 2020 by the Authority of the Freeport Area of Bataan (AFAB).

FAB-registered enterprises are entitled to avail of fiscal incentives under the Special Economic Zone Act of 1995 or Omnibus Investment Code of 1987. This will benefit the company in the form of better timing on the payment of value added taxes, which shall be upon withdrawal of the products from the refinery.

“We continue to implement various cost-saving efforts but tax efficiency is another critical area that should improve. Our AFAB registration will help make our refining business more competitive and financially viable as soon as demand recovers,” said Ang.

Petron’s 180,000 barrels per day refinery—the only remaining refining facility in the country—produces high-value petroleum products and petrochemicals capable of supplying 40 percent of domestic demand.

Despite being greatly affected by the pandemic, Petron said strives to make a positive impact on the economy. The country’s largest oil company remained the biggest contributor in the government’s Fuel Marking Program, according to the latest tally by the Department of Finance.

Image credits: Photo from www.petron.com.Read full article on BusinessMirror

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