PTT plans to double retail fuel margins
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PTT, the national oil and gas conglomerate, plans to double profit margin from fuel retailing business to 30% of total sales by 2022, says Auttapol Rerkpiboon, chief of operations for downstream petroleum business.
To achieve the goal, the company has set aside a capital spending budget next year of 12.17 billion baht, with another 10 billion for each year until 2022 to expand its oil and non-oil businesses.
Mr Auttapol said the executive board approved the increased spending last week.
The board also gave the go-ahead to an increase in the number of petrol stations to 1,800 nationwide next year and to 2,560 by 2022. The company has 1,400 petrol stations now.
“Competition in the retail fuel business should be fierce,” Mr Auttapol said.
PTT hopes the spending plan will allow it to maintain its position as the top fuel retailer with a 41% market share.
The company plans to focus on diesel consumers next year by adding two new diesel stations for trucks.
Diesel consumers are expected to drop over the next several years because of rival projects from competitors, Mr Auttapol said.
The focus on petrol should help offset a dip in gas sales, Mr Auttapol said. Natural gas demand is expected to drop substantially after the removal of universal government subsidies this year, making prices uncompetitive against other fuels.
The capital spending plan calls for PTT to expand the number of Amazon Coffee Shops to 2,300 next year, up from 2,000. The shop total is expected to rise to 4,000 in 2022, Mr Auttapol said.
“Competition in the retail fuel business should be fierce,”
Another expansion on the non-oil front will be new food and drink retailers at PTT petrol stations. Next year, PTT expects to have an additional four food franchise brands at its stations.
Mr Auttapol said PTT is about to finalise a plan to develop budget hotels adjacent to its fuelling stations and could announce a partner for the project soon.
He said PTT plans to expand its petrol station network in other Asean countries from 225 stations to 295 next year and to 600 by 2022.
For lubricants, PTT also plans to increase the sale of lube products next year, particularly in overseas markets such as China, where demand for lube remains high.
PTT expects sales of lube product in China to rise to 400 million litres by 2022, up from roughly 200 million litres this year.
Mr Auttapol said PTT expects fuel demand next year to grow by 2-3%, which is close to growth seen this year, an assumption based on domestic economic growth of 3-4%.
The company’s PTT Oil and Retail Co is expected to be fully spun off in 2018, he said.
PTT Oil and Retail Co aims for a listing on the Stock Exchange of Thailand in 2019.
PTT shares closed yesterday on the SET at 448 baht, up two baht, in heavy trade worth 1.96 billion baht.
Questions & Answers
Q.How will PTT finance its ambitious expansion plans over the next few years?
How will PTT finance its ambitious expansion plans over the next few years?
PTT has allocated a capital spending budget of 12.17 billion baht for next year, with an additional 10 billion baht set aside for each subsequent year until 2022 to fund its expansion in oil and non-oil businesses.
Q.What is PTT's strategy to address the expected decline in diesel and natural gas sales?
What is PTT's strategy to address the expected decline in diesel and natural gas sales?
PTT plans to focus on petrol to offset the dip in gas sales, adding two new diesel stations next year specifically for trucks. The company expects diesel consumers to drop due to competitor projects.
Q.What non-oil business ventures is PTT pursuing to diversify its revenue streams?
What non-oil business ventures is PTT pursuing to diversify its revenue streams?
PTT is expanding its Amazon Coffee Shops to 4,000 by 2022 and adding four new food franchise brands next year. They are also finalising plans to develop budget hotels adjacent to fuelling stations.
Q.How is PTT planning to expand its presence internationally?
How is PTT planning to expand its presence internationally?
PTT intends to increase its petrol station network in other Asean countries from 225 to 600 by 2022. It also plans to boost sales of lube products, particularly in overseas markets like China, aiming for 400 million litres by 2022.
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