Phoenix Petroleum sets aside P5 B for 2018 expansion

Listed independent oil player Phoenix Petroleum Philippines Inc. is allotting P5 billion this year to expand its traditional business as well as its new businesses, a ranking company official said.

Of the P5 billion, P2-to 4-billion would be used to cover the organic growth in stations, storage capacities, logistics assets and IT, Phoenix chief finance officer Joseph John Ong said in a text message.

“We’re looking at about P2-to 4-billion for traditional business, meaning stations, depots, capacities, lorries and the like,” Ong said.

The company has programmed to open 50 retail stations annually, but sees more new outlets this year with construction having started last year.

Last year, Phoenix Petroleum opened 25 gas stations to increase its retail network to 530.

Based on its latest definitive information statement, the company had several retail stations under construction last year, targeted for opening within the first half of this year.

The P5-billion capex would be financed by a combination of cash from operations, debt and some equity, Ong said.

“We are currently studying our options and have the full flexibility to tap all sources of capital,” he said.

Phoenix Petroleum listed yesterday its P1.375-billion fixed-rate notes due 2019 at the Philippine Dealing and Exchange Corp. (PDEx). Proceeds from the offering would be used to partly finance working capital, Ong said.

The notes have a tenor of 18 months with a fixed interest rate of 4.625 percent per quarter. The bonds will mature on Sept. 23, 2019.

“For all intents and purposes, it basically replaces working capital lines. We consider it as a permanent working capital. But this is quite small relative to total requirements. We’re averaging at excess of P10 billion at any point of time, in terms of financing, importation and inventory,” Ong said.

Last year, the oil company set a P2-billion capital expenditure budget for its retail network, storage and logistic capacities.

Part of the budget was already used to acquire Petronas Energy Philippines Inc. (PEPI), now called Phoenix LPG Philippines Inc., to expand its products to liquefied petroleum gas (LPG) retailing.

Phoenix Petroleum also entered the domestic convenience retail market with the purchase of the local operations of Japanese convenience store chain Family-Mart.

With the new investments, the oil company recorded a banner year with all-time highs in sales volume, revenues, and net income on core business.

Its net income grew 65 percent to P1.79 billion, including the partial consolidation of the LPG business beginning August last year.

Meanwhile, revenues surged 45 percent to P44.426 billion as sales volume increased by 17 percent to 1.76 billion liters.