Pandemic prompts Phoenix to slash costs, 2020 capex
Phoenix Petroleum Philippines inc. said it has reduced its capital expenditure (capex) this year by half to P1.5 billion in its bid to conserve cash while the country is grappling with a health crisis.
“We are cutting capex to P1.5 billion and focusing on projects that are immediately revenue generating. We will continue to work to put the company on firmer financial footing as we have done in the past year,” said Phoenix Chief Financial Officer Concepcion de Claro.
The listed-independent oil player has earlier programmed a capex of P3 billion.
Like other oil firms, Phoenix is implementing measures to conserve cash, reduce operating expenses (opex) and shore up working capital.
It could realize about P800 million in savings “mostly sourced from marketing, advertising and travel as we shift resources from
traditional channels to digital.”
“These cost actions will help keep our capex in line with the expected weaknesses in demand this year,” said de Claro.
Moreover, the company is committed to achieving its deleveraging goal of less than 2.25 x pe (priceto-earnings) ratio and maintaining a 1.1x current ratio through the shortening of cash cycle, which as of end-2019 was at 66 days, by progressing on collections, incentivizing early payments and bringing down inventory days.
Phoenix also intends to align its debt maturities with its long-term assets for more flexibility.
“Despite the near-term pressures and uncertainties today, we are confident that the business plan we have, which is investing more on higher margin and higher growth businesses such as retail and LPG [liquefied petroleum gas], and the financial discipline will not only preserve resources but also ensure that we will remain well positioned and will thrive when the industry recovers,” said de Claro.
Meanwhile, Phoenix Pilipinas Gas and Power Inc. (Phoenix Gas) and United States-based Mesa Natural Gas Solutions LLC are set to introduce gas-powered genset units in the country next month.
Mesa is manufacturing the gensets while Phoenix will be in charge of the business in the country.
“We are happy to share that amid the ongoing crisis, Phoenix Gas and Mesa have finished developing our gas-powered gensets, which are now en route to the Philippines for utilization," said Phoenix Gas President Henry Albert Fadullon.
“We are optimistic about the future of these types of gensets in the country, and we hope that this will signal the revolution towards a cleaner and more reliable power source.”
For the pilot run, three genset units, each with a maximum capacity of 350 kilowatts, were produced.
The generator sets are compact-designed, mobile, and custom-engineered to help businesses continue their operations, especially those that are in remote areas and those struggling to get a reliable power supply due to the consequences of the ongoing pandemic.
The units will also use propane rich LPG, a clean, reliable, and more sustainable power source, to function, which will be supplied by Phoenix LPG Philippines Inc.
Primarily targeting to serve companies in the hospitality and manufacturing businesses, the Phoenix Gas-mesa gensets are designed to enable remote performance monitoring on a real-time basis. Its technology also includes an on-site troubleshooting feature, if the need arises.
In December 2019, the two companies signed a partnership to promote the use of gas in the country, and to contribute to the Department of Environment and Natural Resources’ initiatives on Clean Development Mechanism.