Lean, mean Phoenix rises vs crisis

Phoenix Petroleum rolls out long term cost and productivity initiatives

Phoenix Petroleum, the flagship firm of the Udenna Group, is banking on a leaner organization to rationalize cost while raising productivity amid the pandemic.

The company had launched a program that will create a leaner supply chain and logistics, improve productivity, and lower expense base, according to Phoenix Petroleum president Bong Fadullon.

In addition to the earlier disclosed creation of a road transport subsidiary and consolidation of real estate ownership and management into its unit Duta Inc., the company rationalized its lubricants and convenience store retailing supply chains.

Realty ops tucked in

The company said it consolidated real estate management into Duta to enhance asset use and yields.

While a non-core activity, real estate is a crucial part of the company’s competitiveness with its 660 retail stations, 11 storage facilities, 72 FamilyMart stores, and two main business offices. Currently, real estate functions are embedded in the company with varying interests spread across multiple business units.

“Under Duta Inc., we are repositioning real estate as an integrated, dynamic portfolio that aligns real estate resources with competitive strategies and maximizes yield. As a fully owned but separate legal entity, Duta will have greater financial accountability as it will have its own organization and budget,” the company’s Chief Finance Officer Dettie de Claro indicated.

Strategic moves

The company acquired strategic properties for operations, including sites for its storage facilities and prime service stations, to minimize risks related to expiration of lease holdings. Further, the company manages close to 500 leases within its retail and infrastructure network.

Duta shall be in charge of the inventory of owned and leased assets, management of real estate, particularly leases, and future purchase of strategic properties. In addition, it will identify and implement real estate synergies with Phoenix’s other businesses. It will also co-develop with other real estate developers to achieve the properties’ best use and yield.

At its annual stockholders’ meeting, shareholders approved the creation of a road transport subsidiary that can form strategic partnerships with well-established road transport operators, thus minimizing the risks and easing the capex burden. Road transport operations will then be effectively outsourced, which allows the Company to focus on its core sales activities.