Philippines: Shell Profits Rise 50%

In a filing with the Securities and Exchange Commission, Pilipinas Shell Petroleum Corp. said it generated a P7.59-billion profit, a growth of 50 percent from P5.07 billion in the same nine-month period last year.  Net sales fell 35 percent to P98.995 billion from P151.429 billion in the same period last year on the back of lower oil prices, while its gross profit increased to P17.788 billion from P12.635 billion last year.

The company said it reduced its foreign exchange losses by P2.7 billion because of a relatively stable peso this year. The higher net income was also because of an improved competitive costs position, given lower cost of sales due to lower petroleum prices. The reduction in the corporate income tax rate to 30 percent this year from 35 percent last year also shored up its earnings.

Starting January, Shell shifted its pricing strategy to week minus-1 pricing, which meant that the previous week’s international product prices are immediately reflected in the local selling prices, regardless of whether such movement translates to an increase or rollback.  The company had said it also expected to take a hit from Executive Order 839, which placed a price cap on petroleum products in Luzon.

As of September, crude oil prices continued to trade in the $65 to $75 per barrel range, although high distillate stocks ahead of winter and worries about the global economic recovery pulled them downward. Shell set aside P2.021 billion this year for capital expenditures, the bulk of which was allotted for maintenance work, equipment and tank replacement, the expansion of service stations and the support of its retail, lubricants and LPG business.

The company is 67-percent owned by UK-based Shell Petroleum Co. Ltd., and 33 -percent owned by Filipino and other foreign stockholders. The company has an oil refinery in Tabangao, Batangas, and various depots and installations all over the Philippines.

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