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Petron income up 4%

August 9, 2007

[Business World (Philippines) Via Thomson Dialog NewsEdge} Oil refiner Petron Corp. posted a net income of P1.75 billion for the second quarter of the year, higher by 4% than its P1.68-billion income for the same period last year.

In its annual stockholders meeting July 26, Petron President Khalid D. Al-Faddagh said the increase could be attributed to higher sales volume and improved operating efficiency.

“Despite difficult market conditions, we continued to focus on programs aimed at ensuring our market leadership and sustaining our growth momentum,” Mr. Al-Faddagh said.

For the first half of 2007, the firm registered a net income of P2.7 billion, up slightly from 2.69 billion in 2006.

Sales volume in the second quarter increased to 14.10 million barrels from 13.04 million barrels.

But sales volume for the first six months went down to 25.85 million barrels from 26.59 million barrels in the same period last year.

Petron said the decrease was caused by higher oil prices which in turn, affected domestic demand.

As a consequence, the company’s total revenue for the first half was P98.78 billion, down from P106.97 billion last year.

Petron managed to trim down its operating expenses to P2.54 billion, lower by 8% from 2.77 billion in 2006.

The firm said this was due to more efficient operations.

Mr. Al-Faddagh said among the initiatives that they have implemented to ensure efficiency are the use distribution optimizer software which reduces transshipment costs and generates vessel schedules more efficiently, the use of point-of-sales system that automates processes of its service stations, and the implementation of off-sites automation that lets them manage their inventories better.

Petron officials said they were expecting better margins when their $300-million petrochemical project starts coming on-stream in the first quarter of 2008, starting with the Petro Fluidized Catalytic Cracker (PetroFCC).

The project shall produce petrochemical propylene which will allow the company to convert more black products like industrial fuel oils into higher-value white products like Liquefied Petroleum Gas (LPG), gasoline, diesel, and kerosene.

Another component of the PetroFCC project is the BTX unit, which will yield benzene and tolunene, which are used in the packaging industry.

The unit is expected to become operational by the last quarter of 2008.

“We will soon reap the rewards of our diversification into petrochemicals. As the local oil industry matures, this initiative will give us new revenue streams and raise Petron’s level of profitability in the coming years,” said Petron Chairman and Chief Executive Nicasio I. Alcantara.

In May, Petron acquired the LPG retail business of its competitor Chevron Philippines Inc. to boost its market share in the LPG business. The sale entailed 64 dealers and seven refillers.

The company said this increased its LPG volumes in the second quarter by 22%.

In the same month, Petron commissioned oil tanker M/T Petro Anica to enhance its supply chain.

This was part of the company’s aim to buy modern vessels for product deliveries.

Last year, Petron managed to retain its leadership in the oil industry, cornering an overall market share of 38.8%.

Pilipinas Shell Petroleum Corp. came second with 31.4% while Chevron has 15.1%. New players managed to get 14.6%.

Petron, the country’s largest oil company, is the only oil refiner that is listed at the Philippine Stock Exchange. Saudi Arabia Oil Co. and the government each hold a 40% stake in the firm.

The remaining 20% stake is held by the public.

Petron shares closed at P6.40 July 26, up from P6.20 last July 25 .

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And as usual, no mention of the Guimaras oil spill. But no wonder, the funds Petron had spent on its sham cleanup hardly made a dent in its bottomline, because these were reimbursed by the IOPC. In contrast, the affected fisherfolk were paid a pittance despite their sole livelihood virtually erased by the the oil spill. The beaches are still dirty, the soil stinks, there are no fish, and no tourists. Yes, everyone should applaud Petron for its higher income…now read on…

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