Pilipinas Shell Petroleum Corp. unveiled its plan to double its annual investment in retail network expansion to P2 billion starting this year.
PSPC said it was allocating an average of P4 billion annually for capital expenditure, including P1 billion for retail expansion.
It said the annual capex would stay at P4 billion, but the budget for retail expansion would increase to P2 billion, with a target to put up 70 retail stations in 2018 and make further inroads into non-fuel retailing through deli2Go and Select.
“As far as capex is concerned, our typical plan is P4 billion per year. That is how our outlook is for at least three to four years. The big shift is before, we were spending P4 billion and from that, only P1 billion was for retail. For the forward years, at least half of that, P2 billion will be for retail,” PSPC president and chief executive Cesar Romero said.
Romero said the company aimed to open 70 stations annually.
“For stations built, we remain on our commitment of 50 to 70 per year on average. Despite our growth, we do not hesitate to close.. underperforming stations,” he said.
The company opened 66 stations last year, ending 2017 with 1,044 stations nationwide.
‘The business that will have less investment will be manufacturing, the refinery…We completed our major expansions plus a major turnaround. It is really in good shape. The money freed up from the manufacturing investment can now be diverted to retail,” he said.
“We invested $140 million in the refinery. Now, we no longer need to invest similar amount of money for manufacturing. We will continue to pour in money for the supply chain. It allows us good profitability as we have one of the most efficient supply chains in the country,” Romero said.
Romero said sound business management and prudent corporate practices led to the 39-percent surge in net income to P10.4 billion in 2017 from P7.4 billion in 2016.
This translated into an attractive return on capital of almost 27 percent, up from 24.2 percent in 2016 and 13.8 percent in 2015.
It also allowed the company to have a dividend payout of 80 percent, exceeding the company’s policy of a minimum 75 percent payout.
“Our dividend payout of 80 percent exceeds our dividend policy of a minimum of 75 percent of prior year’s income. Our dividend yield is one of the highest in the industry. Our gearing also remains healthy at 18 percent,” Romero said.
He said PSPC was committed to register even better numbers in the coming years, as it aimed to ride on the continuing growth of the Philippine economy.