Pilipinas Shell Petroleum Corp. said Friday it incurred a net loss of P16.182 billion in 2020, a reversal of the P5.621-billion net income in 2019 because of the unprecedented impact of the coronavirus pandemic.
Pilipinas Shell said in a disclosure to the stock exchange 73 percent of the full-year net loss, or P12 billion, represented one-off charges related to the cessation and transformation of its refinery in Tabangao, Batangas and conversion into an import facility, while P4.8 billion was due to the drastic decline in crude prices. The refinery has capacity of 110,000 barrels a day.
The company also posted lower net sales of P156.951 billion last year, compared to P218.402 billion in 2019.
“Transforming the refinery into a world-class import terminal last August was a difficult but vital decision to make given the negative outlook for the refining sector worsened by the COVID-19 pandemic. A very hard decision for Pilipinas Shell but necessary to be more competitive and ratable in the future,” said Pilipinas Shell president and chief executive Cesar Romero.
The company said that as of year-end, it was able to secure jobs for over 134 of the 217 impacted refinery employees within other entities in the Shell Companies in the Philippines, while 26 opted for voluntary retirement.
Pilipinas Shell posted a core net income of P400 million in the fourth quarter, a strong rebound from the third-quarter core net loss of P700 million.
The company said it also exceeded cash conservation targets, recording P3.9 billion in capital and operating expenditure savings, almost double the target of P2 billion for 2020.
Pilipinas Shell said that despite mobility restrictions, it opened 36 new sites nationwide while its supply chain business started the operation of a third terminal in Subic.
“We assure the public of supply security and reliability. We will continue to invest in the country to expand our capacity to support our marketing growth aspirations,” said Romero.
The enhancements are expected to generate structural savings of P850 million from the transformation of the refinery into a full import facility and the operation of the Subic facility this year. The company expects to save at least P600 million from 2023 onwards from the additional supply chain enhancements.
Pilipinas Shell said it planned to add two more terminals by 2025. It allocated capital expenditures of around P1 billion per annum to increase and strengthen its supply chain across the country.
Pilipinas Shell ended 2020 with total volume of 5.1 billion liters, or 13 percent below the pre-pandemic level.
“We are slowly seeing the results of our agility and decisiveness to thrive from the challenges posed by the global pandemic. We are confident about driving fuel mobility and getting the country back on track as the country recovers from the impact of the pandemic,” said Romero.
