Pilipinas Shell sees ‘huge potential’ in non-fuel business

By Victor V. Saulon, Sub-Editor
PILIPINAS Shell Petroleum Corp. (PSPC) expects its non-fuel business to account for a bigger share of its gross income in the coming years, its president said, as he points to doubling the budget for the segment to about P2 billion.
“Non-fuels retailing is something that continues to be our focus because we believe that this will lead us to our next wave of change,” said Cesar G. Romero, PSPC president and chief executive officer, in a media briefing ahead of the company’s annual stockholders meeting in Makati City on Thursday.
Based on the company’s projection, he said non-fuels show a “huge potential” as its contribution last year was only about 10% of gross income.
“We hope to grow this to anything between 20% and 30% in the next three to five years,” Mr. Romero said.
For non-fuels, the company opened 37 Select stores and 35 lube bays, all located in Shell outlets, last year, he said.
“We normally said before, we invest about a billion [pesos] in the retail business. For 2018, we’d double that. We have allocated P2 billion for our retail business compared to P1 billion in the past,” he said.
“We plan to continue to spend this amount of money at least in the next two to three years,” he added.
Yearly, PSPC usually aspires to open 15 to 20 Select stores, and at least 30 to 50 lube bays. Last year, more stores were opened than usual, while lube bays were less than the usual number.
Anthony Lawrence D. Yam, PSPC vice-president for retail, said the company started “moving” the lube bays in the middle of 2017. This year, he said the opening of such bays would be “robust” and continuous towards December, possibly exceeding 50 units.
Mr. Romero said the company hopes to be able to open 200 to 300 Select stores. PSPC currently has 1,044 retail stations after opening 66 last year.
“We have to scale up because part of the game of convenience store is having the scale,” Mr. Yam said, adding that the strategy would make the supply chain more efficient and less costly.
He said the concentration of the stores would be in urban areas such as Metro Manila, Cebu, Davao, Cagayan de Oro, as well as toll roads.
PSPC previously disclosed a capital expenditure of P4.289 billion for 2018 for its retail as well as its manufacturing and supply businesses. Its target budget for 2019 and 2020 was set at P3.903 billion and P4.196 billion, respectively.
“Capital expenditures for retail principally relate to the planned establishment of new retail service stations,” the company said.
Of the 2018 outlay, up to P2.636 billion has been allocated for retail, and P1.653 billion for manufacturing and supply.
“Capital expenditures for manufacturing and supply principally relate to the refinery’s hydrogen optimization in 2018 and 2019. Additional capital expenditure for manufacturing and supply also relate to the improvement of existing supply and distribution sites,” PSPC said.