Petron profit up 10.7% to P870M

Oil refiner Petron Corp. reported a net income of P870 million in the first quarter of 2005, a 10.7-percent increase from P786 million posted over the same period last year, mainly due to lower operating costs.

The company’s operating expenses went down 9.4 percent from P1.39 billion to P1.26 billion on account of lower business expenses and insurance premiums for the period.

The semi-government Petron also announced a cash dividend of 10 centavos per share for stockholders of record as of May 26, 2005.

Total sales volume decreased by 9.9 percent to 11.85 million barrels largely due to a decline in sales to the National Power Corp. Export volumes during the period were also affected by a delay in the last shipment for March.

Export margins, however, improved by around 20 percent due to higher product prices in the Asian region.

"We are pleased with the results of our performance so far, despite an apparent slowdown in the economy. Even with lower sales volumes, we were able to improve our bottom line," Petron’s public affairs manager Virginia A. Ruivivar said. "This reflects the progress we are making in our efforts to improve our operating efficiency."

Net sales for the first quarter of 2005 went up to P38.94 billion from P32.54 billion the year before.

Meanwhile, Petron expects to reap the fruit of its recent investment in refinery upgrading projects within the year, a ranking company official said.

"We hope to see some benefits from our $100-million isomerization and gasoil hydrotreater projects within this year," Petron president Khalid Al-Faddagh said.

Al-Faddagh said while the $100-million investment would translate to a per liter cost of P1, the company will not pass this on to its customers.

"We do not need to recover this from our customers because the efficiencies and gains realized from the projects will offset the cost. The benefits outweigh the costs," he said.

Last May 6, the company inaugurated its $100-million Clean Air Act (CAA) compliant facilities — an isomerization unit and a gasoil hydrotreater — putting it in a unique position of being the only oil company in the country capable of producing clean fuels for domestic requirements. The investment is expected to minimize product importations.

The Petron executive said they would need at least a quarter to assess the performance of the project. "We need to stabilize but we hope to see the benefits within the year," he said.