PHOENIX Petroleum Philippines Inc. has committed P1 billion for expansion of its business amid persistent challenges and uncertainties in global markets.
The oil firm said that as of end-September this year and end-December of last year it has commitments of more than P207.4 million and P800 million, respectively, for expansion on petroleum retail network, depot, terminals and logistics facilities, information technology infrastructure and other major expansions related to its business development.
“The Group plans to expand further its petroleum retail service stations and carry out its investments in its subsidiaries to put up depot and ‘terminalling’ facilities in strategic locations and complete its chain of logistical support to strengthen its foothold in the industry,” the firm said in a filing with the Philippine Stock Exchange.
Phoenix Petroleum is engaged in the nationwide trading and marketing of refined petroleum products, including LPG and lubricants, operation of oil depots and storage facilities, hauling and into-plane services; convenience store retailing; and trading and supply. It has a total of 697 operating retail service stations as of end-September this year.
As of September 30, 2022, and December 31, 2021, Phoenix Petroleum has unused approved LCs amounting to P4,834 million and P11,569.6 million, respectively, the company said.
There are commitments, guarantees and contingent liabilities that arise in the normal course of operations, it added.
As the global economies emerge from the pandemic, Phoenix Petroleum said challenges from the new wave of COVID cases, emerging geopolitical risks, and threat of global recession drive volatility in global oil prices.
But the company assured that it has been able to position itself well to navigate the downturn and for the eventual upturn from the Covid pandemic.
“In response to the intensifying geopolitical crisis and threats to economic recovery, the company has in place risk management measures to mitigate the impact, including initiatives that will reduce the working capital requirement as well as by actively managing inventories and optimizing volume to maximize sales and profitability,” it said.
At end-September, it saw its Ebitda (earnings before interest, taxes, depreciation and amortization) fell down by 32 percent to P1.8 billion, mainly on account of lower domestic fuel volume in the third quarter.
“Domestic fuel volume was sharply lower in the third quarter, with the overseas trading business likewise taking a breather after consecutive quarters of unprecedented growth. Recovery in fuels was further set back by lack of scale driven by persistent challenges in liquidity and uncertainties in global markets and economic growth,” the company reported.
Still, Phoenix Petroleum is banking on a more sustainable supply chain and logistics model to provide it with “better results” moving forward.
On a per unit Ebitda basis, it saw a 21-percent growth year-to-date as it continues to exercise prudence in operational expenditure and capital expenditure and enhance productivity and efficiency across businesses.
For instance, the LPG business grew 11 percent quarter-on-quarter. The company said this remains a bright spot in its portfolio. During the third quarter, domestic LPG volume grew nine percent the prior year and a further eight percent from the previous quarter.
Overseas LPG, likewise, recovered strongly from a weak second quarter this year with volume rising 16 percent quarter-on-quarter and growing three percent year-to-date. Both standalone businesses continue to benefit from robust underlying demand in the Philippine and Vietnam markets, adequately supported by working capital, it said.
“Phoenix Petroleum remains focused on strengthening its operations despite a tumultuous year of volatility in global oil markets, recessionary concerns amidst record high inflation, peso depreciation and monetary tightening, and muted demand,” Phoenix Petroleum President Henry Albert R. Fadullon was quoted in a statement as saying.