Oil refiner and distributor Pilipinas Shell Petroleum Corp. said Wednesday net income surged 105 percent last year to P7.4 billion from P3.6 billion in 2015 despite lower oil prices, amid a retail network expansion program.
“The strong financial performance is driven by increased premium fuel penetration, strong retail volume growth, successful marketing campaigns and logistics cost savings that offset the impact of lower commercial sales volumes and extended refinery downtime in fourth quarter,” Pilipinas Shell said in a disclosure to the stock exchange.
Revenues, however, dropped to P136.76 billion in 2016 from P156.98 billion in 2015, mainly because of lower oil prices last year.
The country’s second biggest oil player said the premium fuel penetration increased to 27 percent from 23 percent in 2015, amid the high preference of motorists for Shell-branded premium fuels.
Pilipinas Shell owns a 110,000-barrel-a-day refinery in Tabangao, Batangas.
“The growth of Pilipinas Shell’s retail network, which continues to be the nation’s most efficient in terms of throughput, underpins Pilipinas Shell’s ability to generate strong cash flows to fund its investment programs,” the company said.
Shell ended 2016 with 996 active retail sites. The company’s retail volume grew 4 percent from the prior year.
Shell said its commercial business faced some challenges in the power sector, but specific businesses such as bitumen and lubricants exhibited double-digit growth from 2015 to 2016.
The increasing number of infrastructure projects in the country supported the growth of bitumen business.
Shell said it would invest $13 million to upgrade its refinery and allow production of bitumen, a crucial component of asphalt which is used for road surfacing and roofing.
“Committed to developing smarter products, Shell Helix and Shell Advance delivered strong brand performance through innovative methods, marketing initiatives and cost management efforts that boosted the growth of Lubricants business,” Shell said.
Pilipinas Shell also paid out an interim dividend based on first-half 2016 results in August last year, amounting to P3.3 billion.
Pilipinas Shell started producing Euro-IV compliant fuels in January 2016 in line with its commitment to promote smarter mobility and smarter products in the country.
The company’s North Mindanao Import Facility in Cagayan de Oro started operations in June 2016. It is considered a game changer for the company as it is positioned to deliver significant logistics cost savings.
“Always aiming to meet current and future energy demands while contributing in creating a new energy future, Pilipinas Shell is committed to continuously grow its marketing business across the retail, commercial and non-fuel retail sectors, enabled by an efficient, safe and reliable manufacturing, supply and distribution chain and driven by strong corporate governance and world-class talent development,” Pilipinas Shell said.
Pilipinas Shell said it would continue to focus on maximizing cash generation while optimizing shareholder returns; carrying out disciplined expansion and capital allocation; and generating attractive dividends of at least 75 percent of prior year audited net income.