PETRON CORP. reported a 78% fall in consolidated first-quarter net income to P1.3 billion from P5.8 billion in the same period last year after a decline in revenues brought about largely by the tax reform, it told the stock exchange on Tuesday.

Malaysian operations significantly propped up the company’s bottom line as these accounted for P1.2 billion of the consolidated net profit.

Consolidated revenues during the quarter dropped by 4% to P124.6 billion after a 5% decline in sales volume for the Philippine operations with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“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,” said Ramon S. Ang, Petron president and chief executive officer, in a statement.

“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,” he added.

Petron said by now, a total of around P4.50 per liter in excise tax plus value-added tax (VAT) are included in fuel prices, translating to an increase of around P8 billion in excise taxes and P1 billion in VAT on a quarterly basis.

The company said the TRAIN Law also created a price advantage for importers since refiners maintain higher inventory in crude form, which is immediately taxed upon production. Importers maintain inventories as finished products that give them the advantage for at least 30 days, it added.

“Compounding this challenge is the declining refining margins in the region, which penalized Philippine operations by P3.3 billion in the first quarter,” the listed oil company said.

It said the impact of the second phase of tax reform and the rising crude prices reduced consolidated income from operations by 45% to P4.9 billion.

In the first quarter, Petron said it continued to expand its network of stations as it opened 40 new stations. It currently has the largest network in the country and in Malaysia, where it has more than 650 stations, bringing Petron’s combined count to over 3,000.

Petron will soon commission its new lube oil blending plant, which will have a capacity twice that of its current Pandacan plant. The new plant will improve the lubes business while improving operating efficiencies and margins, it added.

“With the continued growth of its polypropylene business, the homegrown oil giant is also nearing completion of its polypropylene plant expansion, which will give it better margins,” the company said.

Petron earlier announced that its 180,000 barrel-per-day refinery in Limay, Bataan was forced to go into an emergency shutdown after the April 22 earthquake. It assured the public that the shutdown would not affect local supply as it has ample inventory to supply domestic market requirements.

Petron disclosed its quarterly income after the market closed on Tuesday. Its shares ended the trading day lower by 0.48% at P6.25 each. — Victor V. Saulon