Pilipinas Shell Petroleum Corp. swung to a massive P5.5 billion net loss in the first quarter as sales slowed to a crawl as it grappled with city lockdowns and closures since mid-March
and the slump in global oil prices.
Last year, the oil firm chalked up a net income of P2.4 billion.
Pre-tax inventory holding losses amounted to P7.97 billion as crude prices reached record low due to the breakdown of production cuts discussion between OPEC and Russia and product prices in the global and regional market decline.
Total net sales decreased by 4.9% to P25 billion due to lower average pump prices in the country and lower volumes. Prior to the announcement of the lockdown, marketing volumes rose 6% but declined by 34% in the second half of March.
From a net operating income of P398.5 million, the company incurred P784.4 million in expenses due to mark to market loss.
“Our first quarter loss is disappointing given our robust overall performance last year and the strong marketing delivery from the start of 2020 up until mid-March. We will overcome this challenge the same way we surmounted the various crises and upheavals during our 106-year legacy in the Philippines,” said Pilipinas Shell president and CEO Cesar Romero.
Romero said the company remains financially resilient, having built a strong balance sheet through disciplined capital allocation and strong operational cash flows
Pilipinas Shell is cutting its capital budget by 25% or over P1 billion as part of its cash conservation measures and aggressive working capital management in response to the drastic decline in demand for oil amid the virus pandemic.
Apart from this, Pilipinas Shell decided to delay its dividend decision to give it enough time to assess the implementation of its recovery strategy once the quarantine is lifted.
Pilipinas Shell has also dropped the grant of discretionary performance- related bonuses to employees for 2020.