Oil refiner and retailer Pilipinas Shell Petroleum Corp. said it allocated a capital expenditure budget of P4.289 billion this year mainly to expand its retail business.
Pilipinas Shell, the country’s second biggest oil refiner after Petron Corp., said it would spend P2.636 billion for retail and P1.653 billion for manufacturing and supply.
“Capital expenditures retail principally relate to the planned establishment of new retail service stations,” the company said in a report to the stock exchange.
Pilipinas Shell opened 66 new retail stations in 2017, closing the year with a total of 1,044 retail stations.
It said capex for manufacturing and supply would support the refinery’s hydrogen optimization in 2018 and 2019.
The company plans to spend another P2.338 billion in 2019.
“Additional capital expenditures for manufacturing and supply also related to the improvement of existing supply and distribution sites,” Pilipinas Shell said.
The company said it was expecting to fund the planned capital expenditures using cash generated from operations.
Pilipinas Shell reported a net income after tax of P10.37 billion in 2017, up 39 percent from P7.44 billion in 2017, despite the aggressive competition and the two-and-a-half-month maintenance shutdown of its 110,00-barrel-per-day Tabangao refinery in Batangas province.
The robust earnings were driven by strong retail volume growth following a network expansion and sustained uptake of V-Power fuels, strong regional refining margins and inventory holding gains.
“Pilipinas Shell delivered P10.4 billion in net income and generated P10.7 billion of cash from operations in 2017, 39 percent and 26 percent higher than the prior year. This is a testament to the company’s commitment and continuing focus towards robust cash generation at optimal returns,” said Pilipinas Shell president and chief executive Cesar Romero.
Romero said the higher earnings in 2017 would allow the company to sustain its commitment to high dividend payout at industry-leading dividend yields.
“We are proud to reward our shareholders with a P5.14 dividend per share. This represents a superior dividend yield of close to 9 percent based on the share price at the time of our dividend announcement, making SHLPH one of the highest dividend yielding stocks listed on the PSE. We see this as an attestation of our drive and aspiration to be valued as a world-class, and strategic long-term investment opportunity,” he said.
Sales reached P169.47 billion in 2017, higher than P136.78 billion in 2016. Retail sales volume rose 4 percent, underpinned by high premium fuel penetration at 27 percent.