Petron gets highest credit rating

MANILA, Philippines – Oil retailing giant Petron Corp. retained its PRS Aaa rating from Phil Rating Services Corp. for its outstanding P6.3-billion fixed corporate notes due on August 2011.

PhilRatings likewise maintained its corporate credit rating of PRS Aaa for Petron’s overall capacity to service maturing obligations within a period of one year.

A company given a rating of PRS Aaa – the highest rating on PhilRatings’ scale – reflects its very strong capacity to meet its financial commitments relative to that of other Philippine corporates.

The rating took into account Petron’s healthy earnings and cash flow generation; market leadership; synergy with shareholders; ample liquidity and financial flexibility.

PhilRatings said Petron is expected to register higher revenues given improvements in petroleum prices and sales volume. Margins are likewise expected to improve as a result of the increased production of higher margin products.

Last year, Petron’s revenues fell 34.05 percent to P176.53 billion owing to lower oil prices. Despite the drop in revenues, the oil firm managed a turnaround in its financial performance as it chalked a net income of P4.26 billion as against a loss of P3.92 billion a year earlier.

The turnaround was due to more stable crude oil and finished product prices, better sales, more efficient spending and a sharper focus on key strategies.

“Liquidity ratios are expected to remain sound as the company pares down its short-term borrowings. With significant capital expenditure requirements over the next three years, however, Petron would have to avail of additional long-term loans,” PhilRatings said.

Debt-to-equity ratio is expected to remain at manageable levels, though, as equity build up will partially offset the higher loans.

Petron is acquiring a polypropylene plant, building a power plant, and constructing the second phase of the Refinery Master Plan (RMP2) which would allow the oil giant to convert remaining black yields into higher-margin white products.

“The combined strengths of Petron and San Miguel Corp. have resulted in value-creating initiatives, with the goal of spurring Petron’s growth and profitability, enhanced cost competitiveness across the supply chain, a more cost-effective way of deploying the company’s resources for key initiatives, and faster project implementation and completion,” PhilRatings said.

Petron maintained its leadership position in the industry, with a reported market share of 37 percent in 2009.