Phoenix seeks leaner supply chain, cost cuts

PHOENIX Petroleum Philippines, Inc. (Phoenix) said it is pursuing cost and productivity measures, including the integration of all its property assets under one unit and the ongoing rationalization of its supply chain.

Upon its regular strategic review, the listed independent fuel retailer told the stock exchange on Thursday that it seeks to create leaner supply chain and logistics, improve productivity, and lower expense base.

The company will integrate all of its assets under its property holding subsidiary, Duta, Inc., which will take over the company’s inventory of owned and leased assets, manage real estate leases, and handle future purchase of properties.

It will also identify and implement real estate synergies with other Phoenix businesses, and will co-develop with other real estate developers.

“Under Duta, Inc., we are repositioning real estate as an integrated, dynamic portfolio that aligns real estate resources with competitive strategies and maximizes yield,” Phoenix Chief Finance Officer Concepcion F. de Claro said.

“Duta will have greater financial accountability as it will have its own organization, budget, and Board-approved KPIs (key performance indicator),” the official added.

The company’s stockholders recently approved Phoenix’s investment of up to P4.9 billion into the holding unit over the next three years.

Phoenix also seeks to minimize risks and capital expenditure burden through the formation of a separate road transport company, which will partner with operators.

Phoenix President Henry Albery R. Fadullon noted the low availability of trucks and high attrition among drivers, which affects its efficiency and ability to deliver.

“Adding to the overall complexity is the increased exposure to health, security, safety, and environmental (HSSE) risks and capex (capital expenditure) for the fleet expansion,” he added.

The newly installed president said the company already did test runs of outsourcing delivery operations, seeing an improvement in truck utilization to 1.5 times of trips each day from just 0.75 times.

Moreover, Phoenix continues to rationalize the supply chains of its lubricant and FamilyMart businesses, eyeing to save over P300 million over the upcoming years.

Last year, the company started to shift to third-party service providers from an in-house distribution for both segments.

FamilyMart is said to save P4 million monthly from simplified operations, while its lubricant business is estimated to save P40 million in operating expenses and P230 million in working capital.

“Our domestic opex (operating expenses) were down 12% year-on-year in the )first quarter), which worked especially well for us during these times. We are already realizing gains from these initiatives. We will continuously challenge our cost structure and find ways to be more efficient and drive operational excellence,” Ms. de Claro said. — Adam J. Ang