PILIPINAS Shell Petroleum Corp. is anticipating the impact of the months-long quarantine in the country to be reflected in its second-quarter earnings.
“The crisis is far from over as the effects of the ECQ (enhanced community quarantine) is probably more felt in the second quarter,” Pilipinas Shell President and Chief Executive Officer Cesar G. Romero said in the company’s annual shareholders’ meeting on Tuesday.
In the first quarter, the Philippine-listed oil unit of Royal Dutch Shell reported a “disappointing” loss of P5.5 billion, a reversal of its P2.33-billion income recorded in the same quarter in 2019.
The loss came with the collapse of global oil prices, along with the drop in fuel demand.
“However, Pilipinas Shell has a strong balance sheet, sufficient retained earnings and reasonable gearing of 37%,” Mr. Romero said.
“We are in a robust position not only to deal with market volatility, but also to support the country’s growth as it enters the new normal,” Min Yih Tan said, delivering his first address as the company’s board chairman.
The company has doubled its operating expense savings target this year to P1 billion from P500 million in March, coming from various cash preservation initiatives.
It has also cut its capital expenditure this year by 25% to over P1 billion, while its employees will no longer receive discretionary performance-related bonuses.
Moreover, it deferred the company’s cash dividend declaration to the second quarter in its next board meeting.
Although the oil retailer is uncertain when the country would recover from the ongoing crisis, it will show “leadership and take early and decisive action to stay resilient as a company,” Mr. Romero said. — Adam J. Ang
