Shell Pilipinas Delivers Positive Cash Flow Amid Volatile First Half

The difficult operating environment weighed on earnings, with the Company recording a Php1.9 billion core net loss, reflecting underlying business performance, and a Php2.7 billion reported net loss, which includes inventory effects and one-off items. Results were mainly affected by inventory holding losses, compressed margins as rapid increases in product costs outpaced domestic pricing adjustments, and softer premium fuel demand.

“The first half tested the resilience of energy supply chains across the industry. Our priority was clear: keep fuel available, support our customers and trade partners, and help keep the Philippine economy moving,” said Lorelie Quiambao Osial, President and CEO of Shell Pilipinas.

“By leveraging Shell’s global Trading & Supply network, local infrastructure, and strong customer relationships, we maintained reliable supply through one of the most volatile market environments in recent years. While these conditions materially affected earnings, improving trends in May and June reinforce our confidence in the resilience of our business as we navigate a still-volatile environment.”

Market and pricing pressures weigh on profitability

The Middle East conflict heightened concerns around energy security and fuel availability across Asia, particularly for import-dependent markets such as the Philippines. Oil prices rose sharply, the peso weakened, and uncertainty around potential supply disruptions increased pressure on fuel costs, working capital, and customer affordability.

Shell Pilipinas drew on its integrated supply chain, local terminal footprint, and close coordination with government and industry stakeholders to maintain product availability, support customer affordability, and actively contribute to the public utility vehicle fuel discount program, with one of the broadest mobility site nominations among industry participants.

These market and pricing dynamics compressed industry margins, as higher product costs could not always be fully or immediately reflected in retail and commercial pricing.

Reported net loss included approximately Php1.0 billion in inventory holding losses as oil prices subsequently declined from earlier peaks, partially offset by around Php0.6 billion in one-off gains from the sale of remaining crude inventory and related items. Gearing ended the period at 53%, reflecting the net loss and higher working-capital requirements needed to maintain supply and support customers during the disruption.

Integrated portfolio supports early recovery

Commercial Fuels volume grew by 4%, supported by increased demand from the Power sector and reseller channel, and achieved record monthly volume in June. Mobility volumes declined 4% as high pump prices affected consumer demand, while Lubricants provided resilient earnings support, aided by continued customer demand and the expansion of the Shell Flagship Workshop network.

Focused on restoring profitability

Market conditions began to improve in late May and through June as fuel prices moderated and mobility recovered. Shell Pilipinas remains focused on restoring profitability through disciplined cost and working-capital management, margin recovery, reliable supply execution, and improved competitiveness across its integrated portfolio.

The Company remains committed to executing its Defend, Grow, Deliver strategy, with priorities centered on Cash, Returns, and Growth, and on creating sustainable long-term value for shareholders.

“As we move into the second half, our focus is to restore profitability, strengthen cash generation, and further improve Shell Pilipinas’ competitiveness. The actions we have taken position us to continue serving the country’s energy needs while creating long-term value for our shareholders,” Osial added.

For more information, please visit:
www.pilipinas.shell.com.ph

For inquiries, please contact:
generalpublicenquiries-ph@shell.com
PSPC-Investor-Relations@shell.com