Petron Corporation (PCOR) Earnings Call Transcript & Summary

We will rise for the national anthem and remain standing for the invocation to be led by Ms. [indiscernible]. [Foreign Language] Gracious God, we come to you today with gratitude as we gather once again for this year's Petron Annual Stockholders Meeting. As we celebrate the success and growth of the company, please grant us the clarity to navigate through challenges that may come our way. We ask for your guidance, Dear Lord, as we continue our mission of fueling the nation's development and uplifting our communities. We pray for the wellbeing of our company, Petron, our officers, employees, stockholders and all our partners. May our actions reflect our commitment to a sustainable future for all through the blessings that you continue to bestow upon us. May you continue to inspire and empower us towards better business performance. And through your grace, we pray that we meet greater success and bring you greater glory. We ask this in the name of Jesus. Amen.

Good afternoon, ladies and gentlemen. Meeting will come to order. Were notices to the stockholders duly sent?

Yes, Mr. Chairman.

Do we have a quorum?

Yes, Mr. Chairman, we have a quorum. They are present at this meeting in person by attendance advice e-mail to the company and by proxy about 73.33% of the total outstanding capital stock of the company. And for the record, our Chairman of the meeting, Mr. Ramon S. Ang holds proxies for 73.33% of the outstanding common shares and he is voting in favor of all corporate actions in the agenda or in accordance with validated proxies. Mr. Chairman, we acknowledge the attendance of our directors as shown on the screen. We likewise acknowledge the presence of our directors who have joined us in person. We also acknowledge the attendance of the company's executive officers and RG Manabat, KPMG, the external auditor of the company for 2024. We advised the stockholders that after the management's report, questions and comments e-mailed in advance to our dedicated e-mail address, and those sent through our live stream chat box will be read and addressed. Please identify yourself in your e-mail or chat with your name and address. Priority will be given to questions e-mailed in advance.

The full agenda of this meeting is presented on the screen.

The rationale and brief explanation of each agenda item has been put in our information statement distributed for this meeting. Voting shall be in accordance with the procedures set forth in the information statement, a summary of which is presented on the screen for reference.

Next item on the agenda is the approval of the minutes of the AGM held on May 21, 2024. A copy of which is available for viewing in the Petron website.

Mr. Chairman, I move that the minutes of the Annual Stockholders Meeting held on May 21, 2024 be approved.

I second.

Motion having been duly made and seconded is carried. Next item on the agenda is the presentation of the management's report for 2024. May we request Manny Erana, our CFO, to present.

Thank you, Mr. Chairman. Good afternoon, ladies and gentlemen, and welcome to the 2025 Petron Annual Stockholders' Meeting. 2024 was a tough year marked by slow global economic growth, inflationary pressures, policy uncertainty and lingering geopolitical tensions. Dubai crude's full year average hit USD 80 per barrel. While this is only 3% lower than 2023's $82 per barrel. Significant volatility was seen in 2024 as prices peaked at $89 in April before dropping to $73 by year-end. Prices of finished products were likewise weighed down by weak demand compressing regional refining cracks. Despite these setbacks, Petron showed continuous growth, proving our financial resilience. In 2024, our consolidated sales grew by 10% to 140 million barrels from the previous year's 127 million. Petron's Philippine operations and Singapore trading subsidiary led this growth, with combined sales reaching 92.5 million barrels, a 16% jump from 2023, supported by network expansion and strong marketing efforts. We reported consolidated revenues of PHP 868 million, an 8% increase from PHP 801 billion in 2023, fueled by sustained growth in both local and international operations. While down by 16% from the previous year, Petron remained profitable, posting a net income of PHP 8.47 billion. Petron continues to lead the Philippine market, driven by robust growth across key segments. We ensured success in our retail market by keeping our prices competitive expanding our network and focusing on customer retention. We launched targeted marketing campaigns alongside improvements in our treat stores and other products. We likewise continued to dominate the commercial sector through new and renewed partnerships with major companies, emphasizing our reliability and top-notch service. Our LPG and lubes business recorded another year of growth as we further expanded our footprint and launched new products. While excellent customer service has always been fundamental to us, our Tapat Sa'yo campaign solidified this promise as we reminded our customers of what makes Petron stand out. We kept pace with the growth in demand through our robust and reliable supply chain. To meet our requirements for the year, we strategically expanded and upgraded our storage and distribution facilities, ensuring optimal product inventory levels and the highest delivery fulfillment performance. Throughout 2024, we sustained the stable refinery utilization rate, making full use of the refinery's upgraded facilities and further optimizing its different process units. Petron Malaysia faced a mixed milestone and challenges in 2024. At the start of the year, there were calls for a boycott of foreign brands related to the war in Gaza. In June, the government implemented a new subsidy system for diesel, causing a shift in sales volume from retail to commercial and requiring a new system to be implemented at the service station level. Despite these difficulties, we were still able to pursue growth and expansion, adding 27 new service stations and maintaining our volume at 47.4 million barrels, a testament to our steady progress, efficiency and sustainability in the country. As we continue to grow our business, we try to incorporate innovative solutions into our operations through our environmental, social and governance programs. This helped Petron and our communities walk towards a more sustainable future. We welcome new scholars, including our second batch of college students from Mindanao. We take pride in the continued expansion of our Puno ng Buhay program, which spearheads our nationwide reforestation efforts. We have new initiatives that accompany the strengthening of the CSR efforts. We have rolled out electric vehicle charging stations along NLEX, a future-ready move serving a whole new community of EV owners. Our plastic waste reduction program was launched in support of the extended producer responsibility or EPR Law. This focuses on the recycling of our lube containers to the reduction of our plastic footprint. These are only some of our many programs we implement towards sustainable business operations and to promote the well-being of our communities. Amid an unpredictable and evolving business environment, Petron remains committed to its mission of sustainability and nation building. As an industry leader, we have a responsibility to uplift our partners and communities alongside the growth of our business. We like to call this dedication, Tapat Sa'yo, a promise of loyalty and fellowship to everyone who has made Petron part of their journeys. Thank you for your continued trust and support. Maraming salamat po.

The Chair will now entertain questions.

Chairman, we will start with questions submitted in advance. Good afternoon, Mr. Chairman. We have a question sent by e-main from Mr. Renato De Leon. [Foreign Language]

[Foreign Language] As soon as we are sure of your safety, [indiscernible].

Thank you, Mr. Chairman. Our next questions are from the live stream chat box from Ms. [indiscernible]. [Foreign Language]

[Foreign Language] So I think we should be satisfied with our income.

Thank you, Mr. Chairman. For our next question sent through the live stream chat box from Ms. [indiscernible] [Foreign Language]

[Foreign Language]

Thank you, Mr. Chairman. From Ms. [indiscernible] [Foreign Language]

[Foreign Language] especially with the pronouncement of the new U.S. President, Donald Trump. [Foreign Language]

Thank you, Mr. Chairman. From Ms. Angie S. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Mr. Chair. We also have a comment from the live stream chat box. Congrats [Foreign Language] Kudos to management and employees.

[Foreign Language] I am sure it will keep getting better.

Thank you, Mr. Chairman. All questions on stock information and dividends will be referred to Petron's stock transfer agent, SMC Stock Transfer Service Corporation and will be addressed through e-mail. In addition, questions sent through the live chat that have not been answered today will be addressed in a reply e-mail in the next few days. That would be all, Mr. Chairman.

Mr. Chairman, I move to close the open forum and to approve and ratify the management report as presented.

I second the motion.

Move and seconded. Next item on the agenda is the ratification of all acts and proceeding of the Board of Directors and management since the last AGM held on May 21, 2024 until today, our Corporate Secretary, Attorney Elacio, will guide us on this item.

Thank you, Mr. Chairman. The material items approved by the Board and by the Board Executive Committee since 2024 Annual Stockholders Meeting include the items attached as Annex A to the information statement that we distributed to the stockholders.

Mr. Chairman, I move that the following resolution be approved, resolved that all acts, resolutions and proceedings of the Board of Directors and corporate officers of the company since the annual meeting of the stockholders on May 21, 2024, as set forth in the minutes of the meetings of the Board of Directors and the Executive Committee be approved, confirmed and ratified.

I second the motion, Mr. Chairman.

Moved and seconded. Next item on the agenda is the nomination for the position of external auditor of the company and the ratification of its fee. May I call on Attorney Elacio again to report.

Thank you, Mr. Chairman, the audit [indiscernible] of the company after its evaluation is recommending the appointment of the accounting firm of R.G. Manabat KPMG as external auditors for 2025 and the ratification of its fees for the preparation of the 2025 audited financial statements of the company and its subsidiaries.

May I request Audit Committee Chairman to render his report?

Mr. Chairman, I confirm. Thank you.

Any questions?

Mr. Chairman, I move that the accounting firm of R.G. Manabat & Company or KPMG, be designated as external auditors for the year 2025.

I second the motion.

Move and seconded.

Mr. Chairman, I further move that KPMG's fees as presented be ratified.

A second the motion.

Moved and seconded. Before we proceed to the next agenda, we pause for a moment to remember and honor our Director, attorney Mendoza and attorney and Director, Horacio Ramos, who passed away recent recently. We are grateful for their time and commitment and their invaluable contribution to the company. We shall now proceed to the election of the directors and the Corporate Secretary will read the nominees for the election to the Board.

Thank you, Mr. Chairman. The nominees for election to the Board of Directors are the following: Ramon S. Ang, Lubin B. Nepomuceno, Jose P. de Jesus, Ron W. Haddock, Mirzan Mahathir, Aurora T. Calderon, Francis H. Jardeleza, Virgilio S. Jacinto, Nelly Favis-Villafuerte, John Paul L. Ang, Emmanuel E. Erana, Jacqueline L. Ang; and for independent directors: Artemio V. Panganiban, Margarito B. Teves and Ricardo C. Marquez.

In the information statement circulated for this meeting, the 3 nominees for the election as independent directors are mentioned. They are Artemio Panganiban, Margarito Teves and Ricardo Marquez. This is in accordance with the mandatory requirement of SEC for electing independent directors. May I call on Attorney Elacio to report on the recommendation of the Corporate Governance Committee.

Thank you, Mr. Chairman. As discussed in the information statement that we distributed for the meeting, we have independent directors retired Chief Justice Artemio Panganiban; and Mr. Margarito Teves, who have been serving the company as independent directors for more than 9 years. This is beyond the term limits of independent directors. In accordance with the manual of corporate governance of the company, and upon endorsement of the Board Corporate Governance Committee, the Board has founded the independence of directors, Panganiban and Teves has not been diminished or impaired by their long service as independent directors of the company. Further, the Board has full confidence that Mr. Directors Panganiban and Teves will continue acting as independent directors with the same zeal, diligence and vigor as when they were first elected. For these meritorious reasons, the Board has approved and endorsed for the vote of the stockholders, the election of the 15 nominees, including independent directors, Panganiban and Teves as independent directors pursuant to the corporate governance manual of the company.

May I request Director Ricardo Marquez of Corporate Governance Committee to please confirm?

Mr. Chairman, I confirm. Thank you.

Mr. Chairman, I move that balloting be dispensed with and that all nominees be considered unanimously elected as directors of the company for the ensuing year, including independent directors, Panganiban and Teves until their successors are elected and qualified and represented by proxies be distributed and recorded accordingly.

I second the motion.

Motion having been duly made and seconded is carried. The 15 nominees are declared duly elected members of the Board of Directors of the company. On behalf of your Board of Directors, I thank all of you for your vote of confidence. Next item on the agenda is the ratification of the director's fee for year 2025. May I call on Attorney Elacio to report on the recommendation of the Corporate Governance Committee.

Thank you, Mr. Chairman. After evaluation and based on the recommendation of management and in accordance with the corporate governance manual of the company, the Board Corporate Governance Committee is recommending the payment of directors' fees for 2025 totaling PHP 16.95 million and the Board has approved the same.

May I request Director Teves to confirm?

Mr. Chairman, I confirm. Thank you.

Thank you. Is there any objection?

Mr. Chairman, I move that the directors' fees for 2025 be ratified.

I second the motion.

Move and seconded. Does anyone have any matters or business to present to this assembly. If none, the Chair will entertain a motion to adjourn.

Mr. Chairman, I move that the meeting be adjoined.

I second.

Meeting is adjourned. Thank you.