Petron sees profit hitting P5.7B

Petron Corp., the country’s largest oil refiner, is projecting its net income to reach P5.7 billion in 2007, a ranking company official said.

The official told The STAR that the projected income, presented during the recent Petron board meeting, would be driven by the oil company’s aggressive expansion program.

According to the official, who requested anonymity, the income assumption is also anchored on the oil firm’s continuing efforts to expand its operations abroad particularly its export business.

During the last stockholders’ meeting, Petron president Khalid Al-Faddagh said they expect their income to hit the P10 billion mark by 2010.

If Petron would be able to sustain its improved performance, the official said earnings could reach P13.5 billion in five years’ time or by 2011.

The official did not cite the estimated income for 2006 but as of end-September 2006, the company registered earnings of P4 billion, a 16.4 percent drop from P4.78 billion in the same period in 2005.

In a disclosure to the Philippine Stock Exchange, the publicly-listed oil firm said the decline in profits for the period could be attributed to the sudden and steep drop in crude and finished product prices in the third quarter.

The company said "it experienced inventory losses because of the unprecedented fall in oil prices."

The drop in income came despite an 18.64 percent increase in the company’s revenues for the nine-month period of P164.2 billion compared to the prior year’s P138.43 billion.

Petron said its revenues from export also dropped during the period under review. "Export margins — especially for industrial fuel oil-were likewise affected, although mixed xylene sales remained robust," it said.

The company noted that Dubai crude, the benchmark being used by local oil refiners, fell to as low as $54.92 per barrel in September from $72.24 per barrel in August.

"While we posted a lower-than-expected income for the first nine months of the year, we see this as a temporary setback and we continue to remain optimistic about our near- to long-term prospects," Petron public affairs manager Virginia Ruivivar said.

Ruivivar said Petron would continue its expansion program particularly in the retail market while it pushes with its diversification strategy into petrochemical business.

At present, Petron has the biggest service station network in the industry with more than 1,265 stations nationwide. The company controls more than 34 percent of the highly competitive retail market.

In industrial trade, Petron has about 47 percent of total volume.

Overall, Petron continued to dominate the market with a market share of over 39 percent.

The oil firm also reported that its board has approved a $77.6 million budget for the engineering, procurement and construction (EPC) of its petrochemical project.

As of August 2006, the petro fluidized catalytic cracker (PetroFCC) unit in Limay, Bataan, is over 30 percent complete.

The PetroFCC will allow the company to produce more high-value products and extract the petrochemical grade propylene. A BTX (benzene, toluene and xylene) unit which will produce aromatics and expand the company’s mixed xylene production capacity will also be constructed as part of a $300-million refinery masterplan.