Pilipinas Shell Petroleum Corp., the country's second largest oil company, said Tuesday it expects to grow its earnings at the same pace or faster than the projected gross domestic product growth this year.
"We see our performance to continue to be strongly correlated to the performance of the Philippine economy," Pilipinas Shell president Cesar Romero said during the company's annual stockholders meeting held virtually.
"Hence, if the Philippine economy recovers in conjunction with positive development in the health crisis, then we see every reason to see improvements in our business," Romero said.
Pilipinas Shell posted a net loss of P16.182 billion in 2020, a reversal of P5.621-billion net income in 2019 amid the unprecedented impact of the coronavirus pandemic.
Around 73 percent of the full-year net loss or P12 billion represented one-off charges related to the cessation and transformation of its 110,000-barrel-per-day refinery in Tabangao, Batangas and its conversion into a world-class import facility, while P4.8 billion was due to the drastic decline in crude prices.
The company also posted lower net sales of P156.951 billion last year, compared to P218.402 billion in 2019.
"The impact of COVID-19 to our businesses is still present—slower demand due to increase in COVID cases in key cities, including logistical constraints in opening stations in areas where quarantines are imposed," Romero said.
"Hence, financial resilience and prudent investments remain a priority to ensure that we are able to weather any prolonged challenges and at the same time, be in a position to emerge stronger from the crisis," he said.
Rey Abilo, Pilipinas Shell chief finance officer, said the company was aspiring to grow earnings in line or at least higher than the projected GDP growth rate.
"If the government health measures will progress as promised, then we can assume that no. 1, the petroleum demand will go back to pre-pandemic levels by 2022. And no. 2, energy demand, vehicle sales and household spending will also grow in line with the increase in economic activities. These serve as the foundations for growth for our businesses," Abilo said.
He said the company was expected to continue generating structural operating expense savings of around P700 million this year.
"But over and above, this absolute level of profitability, a key feature we expect to see from the refinery conversion, is the higher degree of ratability in our performance reduce volatility of earnings," he said.
Abilo said that as Pilipinas Shell now has a fully-imported supply chain, "we will have no more exposure to the highly volatile and currently depressed refining margins."
"We're also reducing our exposure from our inventory losses…now that we only carry finished products and we have a relatively shorter supply chain," he said.
He said the cessation of its refinery business allowed the company to redeploy its capex or resources to projects that generate higher yields which would support growth agenda.
Min Yih Tan, Pilipinas Shell chairman, said the Philippines continued to be a country of positive interest for Royal Dutch Shell.
"The country maintains robust macroeconomics and attractive demographics which puts it in a very good position to survive, and recover and thrive from the crisis," he said.
"Our outlook is the global supply and demand imbalance of petroleum products, worsened by COVID pandemic, makes it economically unsustainable in the refining business and thus our difficult but bold decision to change our supply chain. We are here to stay and thrive and Shell has been in Philippines for over a century and will be here for the next hundred years," he said.