PILIPINAS Shell Petroleum Corp. posted a P5.55-billion net loss in the first quarter as the coronavirus disease 2019 (COVID-19) pandemic led to a collapse in global oil prices, along with falling oil demand.

In a disclosure to the stock exchange, Wednesday, the local unit of Royal Dutch Shell reported a reversal of the P2.33-billion income it registered in the same quarter in 2019.

“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,” Pilipinas Shell President and Chief Executive Officer Cesar G. Romero said in a statement.

“We have taken prompt action to reinforce the financial strength and resilience of our business, leveraging on the flexibility of our supply chain and prudent balance sheet management over the past years,” he added.

The listed oil company has doubled its operating expense savings target this year to P1 billion from P500 million in March, coming from various cash preservation initiatives.

Pilipinas Shell has cut its capital expenditure this year by 25% to over P1 billion, while its employees will no longer receive discretionary performance-related bonuses.

Its marketing volumes declined by 36% in the second half of March after the government imposed an enhanced community quarantine (ECQ) in Luzon. This is despite increasing them by 6% before the lockdown period.

Before ECQ, the total volumes of its retail business registered flat despite the Taal Volcano eruption in January. During the lockdown period, it went down over 50%.

Its non-fuels retailing delivery remained flat in the quarter, compared with a year ago, after partnering with delivery firms to transport non-fuels retail products to select areas during the quarantine period.

The increased premium penetration in lubricants by 8% also contributed to this, after a “strong” execution of its Women’s Month promotions and sales from its new range of products.

Its commercial business saw a 16% growth in volumes before the ECQ period, while premium fuel penetration also increased.

During the lockdown, these volumes went up 20% as operations of its base-load plant customers were restored, new customers in construction, manufacturing, and wholesale sectors were acquired, and as customers increased their inventories after the quarantine announcement.

The firm’s volume of lubricants grew by 7% from January to the first half of March, but it declined by over a half from the latter March period. However, it posted higher income in the quarter, driven by increases in both premium penetration and wallet share from customers.

Aviation fuel volumes recorded a 2% uptick in the quarter despite flight cancellations at the Ninoy Aquino International Airport during the volcano eruption and lockdown period. During the latter half of March, it saw aviation fuel volumes fall by 60%.

In the quarter, the company opened five new Shell Select shops, five Shell Helix Oil Change (SHOC)+, and nine co-locators.

Recently, Pilipinas Shell announced it would shut down its 10,000-barrel-per-day Tabangao refinery in Batangas for a month starting May 15, citing the decline in demand for fuel products and falling refining margins during the lockdown.

On Wednesday, shares in PSPC inched down 0.96% to close at P18.54 each. — Adam J. Ang