Phoenix Petroleum to issue P1-B 5-yr bonds

MANILA, Philippines - Davao-based Phoenix Petroleum Philippines Inc. will issue P1 billion worth of five-year bonds to fund the continued rollout of gas stations and depots in major areas across the country.

The bond issue was assigned a PRS Aa rating by domestic credit watcher Philippine Ratings Services Corp.

Obligations rated PRS Aa are of high quality and are subject to very low credit risk, as the issuer’s capacity to meet its financial commitment on the obligation is very strong, PhilRatings said.

In issuing the rating, PhilRatings took into account the upward trend in the firm’s profitability, successful equity capital raising activities which supported business expansion, the continuous business expansion in both the retail and commercial/industrial segments, and the expected improvements in cash flows from operations over the long term.

PhilRatings said Phoenix Petroleum’s total revenues improved significantly from 2006 to 2010. “Using the year 2006 as the base year, total revenues in 2010 were about nine times higher. The compounded annual growth rate for the period was a robust 77.43 percent,” it said.

Net income likewise registered notable growth, with a compounded annual growth rate for the five-year period of 54.87 percent. Core net income increased from P74.26 million to P427 million in 2010.

In 2011, net earnings further rose 19.5 percent to P510.5 million on the back of an 86 percent jump in revenues to P27.47 billion.

The improvement in the company’s financial performance over the last six years was primarily driven by substantial increases in sales volume of petroleum products and income from fuel service and storage. The aggressive expansion of Phoenix Petroleum’s retail and distribution network (from one in 2005 to 220 in 2011) and its improved commercial/industrial customer base supported the increase in sales volume.

The continuous expansion also allowed the company to increase its overall market share from 0.3 percent in 2009 to 3.6 percent as of the first half of 2011.

The oil firm, however, is still far behind the Big Three – Petron, Shell and Chevron – which have well-established distribution networks.

From 120 stations in 2009, Phoenix Petroleum’s branch network increased to 161 and 220 stations in 2010 and 2011, respectively.

Of the total, 151 are based in Mindanao, 11 in Visayas and 58 in Luzon, with approximately 31 percent classified as company-owned and 69 percent dealer-owned.