Philippines
Shell Pilipinas Reports Losses Amid Rising Energy Costs
The oil company faces challenges from inventory losses and shrinking fuel margins, leading to a reported net loss of P2.7 billion in the first half of 2026, which includes inventory effects and one-off items.
Shell Pilipinas Corp. has reported a core net loss of approximately P1.9 billion (around $34 million) for the first half of 2026, resulting in a total reported net loss of P2.7 billion (about $48 million), which includes inventory effects and one-off items. The company reported a profit of P965.3 million (approximately $17 million) during the same period last year. The company attributed its financial struggles to a challenging operating environment characterized by significant inventory holding losses and compressed margins, as the rapid increase in product costs outpaced domestic pricing adjustments, as outlined in their recent financial statements.
In the second quarter alone, Shell Pilipinas experienced a net loss of P4.33 billion (around $77 million), a decline from a net profit of P221.73 million (approximately $4 million) a year prior. The company reported a 49% increase in net sales, reaching P83.68 billion (about $1.5 billion), but this was overshadowed by a staggering 63.8% rise in the cost of sales, which surged to P83.60 billion (around $1.5 billion). Consequently, gross profit plummeted to P89.73 million (approximately $1.6 million) from P5.11 billion (around $91 million) the previous year.
According to Shell Pilipinas, the sharp decline in fuel marketing margins was primarily driven by a timing lag between the rapid rise in global product costs and local market pricing. The ongoing geopolitical tensions in the Middle East have further exacerbated oil price volatility, impacting both global and domestic supply chains. As a result, the company recorded a pretax inventory holding loss of P1.38 billion (approximately $24 million) in the first half of the year, significantly affecting its financial performance.
“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.”Lorelie Quiambao Osial, President and CEO of Shell Pilipinas
Despite these losses, Shell managed to generate P2.4 billion (around $43 million) in free cash flow during the first half, which helped maintain liquidity and supply reliability amidst the volatile energy market. Lorelie Quiambao Osial, President and CEO of Shell Pilipinas, emphasized the company's commitment to ensuring fuel availability and supporting customers during this turbulent period. She noted that the first half tested the resilience of energy supply chains across the industry and stated that their priority was to keep fuel available, support customers and trade partners, and help keep the Philippine economy moving.
Commercial fuels volume increased by 4% due to heightened demand from the power sector and reseller channels, though mobility volumes saw a decline of 4% as high pump prices impacted consumer demand. The lubricants segment, however, provided some resilient earnings support. Looking ahead, Shell Pilipinas aims to restore profitability in the latter half of the year through disciplined cost management and improved competitiveness.
On the stock market, shares of Shell Pilipinas fell by P0.16, or 1.9%, closing at P8.24 (about $0.15) each, reflecting investor concerns over the company's financial outlook amid ongoing energy market challenges.