Oil refining giant Petron Corp. saw its first quarter earnings plunge 77.6% to P1.3 billion, largely due to higher taxes under the second tranche of the tax reform law.
Income from operations slid 45 percent to P4.9 billion as revenues declined 4% to P124.6 billion, due mainly to a 5 percent drop in volume for the Philippine operations following the implementation of the TRAIN Law.
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The TRAIN Law created a price advantage for importers since refiners maintain higher inventory in crude form, which is immediately taxed upon production.
Importers ,however, maintain inventories as finished products which give them the advantage for at least 30 days.
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Compounding this challenge is the declining refining margins in the region.
“Despite lower margins, efforts to manage risks and strengthen our presence in key areas were implemented to mitigate its impact. We remain focused on completing major expansion projects that will further cement our leadership in the industry. We fully understand that long-term growth will always be threatened by inherent risks, and these investments will ensure our continued growth and profitability in the future,” said Petron president and CEO Ramon S. Ang.
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During the quarter, Petron opened 40 new stations each in the Philippines and Malaysia, boosting its total network to over 3,000.