PSE Circular for Brokers No. 2453-98

October 28, 1998 PSE CIRCULAR FOR BROKERS NO. 2453-98 Press Release October 27, 1998 PETRON POSTS REVENUE GROWTH Petron posted revenues of P45.1 billion as of the end of September, achieving a modest growth of 1.6 per cent year-on-year in spite of a decline in sales volume of around 2.8 per cent. The company's net income year-to-date September of P2.8 billion is a considerable improvement over the P1.4 billion reported for the same period last year. Petron's recent performance relative to first half of the year, when it reported a revenue growth of 5 per cent, reflects the effects of the economic crisis as well as the intense competition resulting from the deregulation of the oil industry. The company's sales have been hit by the slowdown in industrial activity, and particularly by the recent interruptions in the operations of Philippine Airlines one of the company's major customers. More intense competition resulting from deregulation has also put pressure on Petron's revenues. In the last few months, prices of fuel oil and diesel in the world market have been abnormally depressed by slowing demand in Asia, with Singapore refiners posting negative margins. This has enabled importers of these fuels - mainly the new industry players to compete heavily with domestic refiners, particularly in the industrial accounts. As the refined market stabilizes, Petron should be able to reassert its competitive advantages vis-a-vis other players. Meanwhile, the Petron board of directors, during its quarterly meeting held today, approved funding for P670 million worth of projects that will further boost efficiency in Petron's marketing and refining operations. The Petron board also approved the award of a P556.0 million contract for projects that will help maintain a high level of refinery utilization and enhance the company's profitability through higher value-added products. The contract was awarded to Hyundai Engineering Corporation of Korea for the engineering, procurement and construction of the thermocatalytic cracker unit (TCCU) revamp and mixed xylene unit projects. Petron Corporation, the country's biggest oil refining and marketing company, reaffirms its commitment to serve its customers even better. It shall enhance its delivery of quality products and services and actively pursue its community development and environmental protection programs.