The Securities and Exchange Commission granted Phoenix Petroleum Philippines a permit to sell up to P3.50 billion worth of commercial paper.
Phoenix Petroleum senior vice president for external affairs Raymond Zorrilla said the company aimed to list the commercial papers next week and “proceeds will be used for working capital, in particular, fuel importation.”
Phoenix expressed optimism that it would return to profitability in the third quarter after narrowing its losses in the second quarter.
“We are pleased with the progress we’ve made in stabilizing the business as we are on track to bringing the business back into profitability by third quarter. We are confident and hopeful that the worst is behind us,” Phoenix president Henry Albert Fadullon said.
Phoenix reported earnings before interest, tax, depreciation and appreciation of P1.22 billion in the first half, driven by a 43-percent quarter-on-quarter growth in volume led by the overseas business, particularly by liquefied petroleum gas, improved overall margins and significant cost actions.
The company said revenues in the first half were lower by 30 percent given the sharp year-on-year-year decline in oil prices amid the coronavirus pandemic.
Phoenix’s limited inventory replenishment due to credit tightening curtailed recovery and resulted in weaker-than-expected volume in domestic fuel.
Overall, the company reduced its net loss to P5 million in the second quarter from the P386 million net loss it incurred in the first quarter.
“We continue to deliver quality and safe products, and essential services to our customers whose patronage helped minimize disruptions to our business. To the extent that we can, we will continue to assist customers during these challenging times by granting credit extensions. However, regional and local developments within the industry and credit markets have tightened access to working capital. We saw this hamper our recovery in the second quarter as we had to divert resources to debt service and pull back on inventory replenishment,” Fadullon said.
The company said LPG outperformed the rest of the business and emerged as an essential product for households as individuals and families stayed and prepared meals at home during the lockdown.
The surge in demand was supported by the company’s partnership with Hengyi Industries that ensured security and reliability of supply.
Growth was across the board in the Philippines and Vietnam with total volume up 88 percent year-on-year in the first half.
Phoenix Gas Vietnam showed remarkable growth and delivered 409-percent volume increase with only selective movement restrictions and no widespread lockdowns in place in the country.
Prior to the enhanced community quarantine, the company reduced inventory levels by delaying imports, which allowed it to minimize inventory losses resulting from falling prices and the slowdown in demand.
Phoenix benefited from the structural cost reductions following the streamlining of the lubricants and FamilyMart supply chains in 2019 and the rationalization of its road transport unit this year.
With leaner operations, Phoenix Petroleum was able to reduce operating expenses and sustainably improve long term productivity. The company expects P800 million worth of opex savings by year-end.
Meanwhile, Phoenix is actively seeking more efficiencies after achieving P1.3 billion of its P1.5-billion goal of capital expenditure savings.
Around 90 percent of the company’s station network remained operational, with no supply chain disruption at the peak of the lockdown. The decline in retail volume was minimized to 13 percent. As of end-June, total station count was 660.
The company said transportation-related industries such as commercial road, domestic marine and domestic aviation see longer recoveries.
Commercial and aviation sales were lower by 36 percent but are expected to recover as demand from sectors like power and manufacturing pick up.
Convenience store retailing operations were also limited, with two-thirds of the store network operational for the duration of the quarantine. Singapore’s trading operations meanwhile recovered from the first quarter and significantly contributed to growth in the second quarter.
Phoenix is engaged in the nationwide trading and marketing of refined petroleum products, including LPG and lubricants, operation of oil depots and storage facilities, hauling and into-plane services; convenience store retailing; and trading and supply.
