PHOENIX Petroleum Philippines Inc. reduced its net loss in the second quarter to P5 million, from P386 million in the first quarter brought about by the strong demand of its liquefied petroleum gas (LPG) product.
The company said LPG outperformed the rest of its business and emerged as an essential product for households as individuals and families stayed and prepared meals at home during the lockdown. The surge in demand, it added, was ably supported by the oil firm’s partnership with Singapore-based Hengyi Industries International Pte. that Phoenix Petroleum said ensured security and reliability of supply.
Growth was across the board for the Luzon, Visayas, Mindanao and Vietnam markets with total volume up 88 percent year-on-year in the first half. Phoenix Gas Vietnam, in particular, delivered a 409-percent volume increase with only selective movement restrictions and no widespread lockdowns in place in the country.
The company’s earnings before interest, tax, depreciation and amortization stood at P1.22 billion in the first half, driven by a 43-percent quarter-on-quarter growth in volume led by the overseas business, particularly by LPG, improved overall margins, and significant cost actions in the second quarter.
Revenues were down 30 percent, mainly due to a sharp year-on-year-year decline in oil prices. However, limited inventory replenishment due to credit tightening curtailed recovery and resulted in weaker-than-expected volume in domestic fuel.
“We continue to deliver quality and safe products, and essential services to our customers whose patronage helped minimize disruptions to our business. To the extent that we can, we will continue to assist customers during these challenging times by granting credit extensions,” Phoenix Petroleum President Henry Albert R. Fadullon said.
“However, regional and local developments within the industry and credit markets have tightened access to working capital. We saw this hamper our recovery in the second quarter as we had to divert resources to debt service and pull back on inventory replenishment,” Fadullon added.
Prior to the community quarantine, the company said it reduced inventory levels by delaying imports, which allowed Phoenix Petroleum to minimize inventory losses resulting from falling prices and the slowdown in demand. In addition, the oil company benefited from the structural cost reductions following the streamlining of the lubricants and FamilyMart supply chains last year and the rationalization of its road transport unit this year.
With leaner operations, Phoenix Petroleum is able to reduce operational expenses (Opex) and sustainably improve long term productivity. Opex per liter was down 30 percent in the first half. With implemented Opex cuts close to P400 million, the oil firm expects P800-million worth of savings by year-end. Also, Phoenix Petroleum is actively seeking more efficiencies after achieving P1.3 billion of its P1.5 billion goal of capital expenditure savings. “We are pleased with the progress we’ve made in stabilizing the business as we are on track to bringing the business back into profitability by third quarter,” Fadullon said.