Phoenix Petroleum Philippines said it undertook major supply chain rationalizations to generate savings of more than P300 million over the next few years.
It said the move would help the oil company weather the impact of the coronavirus pandemic which dampened demand worldwide.
“As a result of its regular strategic review, Phoenix Petroleum is pursuing a cost and productivity program that will create leaner supply chain and logistics, improve productivity and lower expense base. In addition to the earlier disclosed creation of a road transport subsidiary and consolidation of real estate ownership and management into its standalone 100-percent owned company Duta, Inc., the company rationalized its lubricants and convenience store retailing supply chains,” Phoenix said in a disclosure.
The company said real estate is crucial in the company’s competitiveness with its 660 retail stations, 11 storage facilities, 72 FamilyMart stores and two main business offices. Real estate functions are embedded in the company with varying interests spread across multiple business units.
“Under Duta Inc., we are repositioning real estate as an integrated, dynamic portfolio that aligns real estate resources with competitive strategies and maximizes yield. As a 100-percent-owned but separate legal entity, Duta will have greater financial accountability as it will have its own organization, budget, and Board-approved KPIs,” said Phoenix chief finance officer Dettie de Claro.
Duta will be in charge of the inventory of owned and leased assets, management of real estate, particularly leases and future purchase of strategic properties. It will also identify and implement real estate synergies with Phoenix’s other businesses and co-develop with other real estate developers to achieve the properties’ best use and yield.
Shareholders earlier approved the investment of up to P4.9 billion worth of assets into Duta over three years.
Phoenix said that through its road transport subsidiary, it could form strategic partnerships with well-established road transport operators, thus minimizing the risks and easing the capex burden. Road transport operations will then be effectively outsourced, which allows the Company to focus on its core sales activities.
The company shifted in- house operations for both lubricants and FamilyMart to third party services, realizing P88 million in operational expense savings combined for both businesses over the next few years and P230 million in working capital release for lubricants alone.
Operational expense savings were mostly from permanent fixed cost reductions in warehouse rentals, staffing and other logistics assets as well as increased efficiencies and elimination of pilferages, which are now borne by the third-party provider.
“Our domestic opex were down 12 percent year-on-year in the first quarter, which worked especially well for us during these times. We are already realizing gains from these initiatives. We will continuously challenge our cost structure and find ways to be more efficient and drive operational excellence,” De Claro said.
Meanwhile, Phoenix announced that it now offers contactless payment options at its gas stations to ensure safer transactions amid concerns over possible transmission of COVID-19 through paper bills and coins.
Phoenix is offering four e-payment options in the country with a total of 100 Phoenix gas stations all over Luzon now allowing payment via Alipay, GCash, GrabPay, and WeChat Pay through QR code scanning.
The move came as part of the company’s tightened safety protocols across its businesses to help stop the pandemic, newly-installed Phoenix president Henry Albery Fadullon said.
“Phoenix has always been an advocate of safe and secure service. While we continue to provide quality products to our customers, we are also very serious in our rally towards stopping the spread of COVID-19,” Fadullon said.
The company is also set to implement this new method of payment at its stations in Visayas and Mindanao in June.
Fadullon said the company made most of its employees work from home to avoid exposure to the virus. “This time, we want to further ensure the safety of our customers by offering contactless transactions that could help flatten the curve,” he said.