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Petron reports profit drop on lower prices

November 12, 2006

By Euan Paulo C. Añonuevo
Manila Times, Nov. 11, 2006

PETRON Corp. said its end-September profits suffered a double-digit decline because of the unexpected drop in crude and finished product prices in the third quarter.

In a statement on Friday, Petron said that its net income from January to September went down by 16.4 percent to P4 billion from the same period last year.

Revenues grew by 18.64 percent to P164.2 billion year on year.

The company reported that it experienced inventory losses because of the unprecedented drop in oil prices.

The price of Dubai crude dropped from a high of $72.24 a barrel in August to a low of $54.92 a barrel in September.

Export margins were also affected specially for industrial fuel although Petron added that its mixed xylene sales remain robust.

Despite the lower-than-expected income the company said that it will be pushing through with expansion plans in the retail market and its diversification strategy into petrochemicals.

Petron, which dominates the market with a 39.1-percent share, has the biggest service station network in the industry with a 34.3-percent share at more than 1,265 stations nationwide. It also has a 47.5-percent share in industrial trade.

The company also said that the engineering, procurement and construction of its Petro Fluidized Catalytic Cracker (PetroFCC) unit is already a third complete. The PetroFCC will allow the company to produce high-value white products and extract the petrochemical grade propylene.

Petron is also set to construct a BTX unit under a planned $300-million refinery master plan to produce aromatics such as benzene and toluene and expand its mixed xylene production capacity.

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