Q2 2026 Shell Pilipinas Corp Earnings Call

August 14, 2026

Joan Co: H1 2026 analyst briefing. Thank you to investors, analysts, shareholders, and other members of the investment community dialing in from across the regions and time zones. I am Joan Co, Investor Relations and Corporate Strategy Manager, and I will be your moderator for this session. Today, management will take you through Shell Pilipinas' H1 results, business performance, and key priorities as we navigate the evolving operating environment. As a quick reminder, our quarterly report is available on the Shell Pilipinas website and through PSE EDGE. Before we begin, let me briefly cover safety. At Shell, safety means fundamental to how we operate. Even in a virtual setting, please remain mindful of your surroundings, and do not join the briefing while driving. If you are using an earpiece, ensure that you can still hear alarms or other important signals around you.

Jhonna Cañeja: Half 2026 Analyst Briefing. Thank you to investors, analysts, shareholders, and other members of the investment community dialing in from across the regions and time zones. I am Jhonna Cañeja, Investor Relations and Corporate Strategy Manager, and I will be your moderator for this session. Today, management will take you through Shell Pilipinas' H1 results, business performance, and key priorities as we navigate the evolving operating environment. As a quick reminder, our quarterly report is available on the Shell Pilipinas website and through PSE Edge. Before we begin, let me briefly cover safety. At Shell, safety means fundamental to how we operate. Even in a virtual setting, please remain mindful of your surroundings, and do not join the briefing while driving. If you are using an earpiece, ensure that you can still hear alarms or other important signals around you.

Speaker #1: 2026 analyst briefing. Thank you to investors, analysts, shareholders, and other members of the investment community dialing in from across regions and time zones. I'm John Cañeja, Investor Relations and Corporate Strategy Manager, and I will be your moderator for this session.

Speaker #1: Today, management will take you through Shell Pilipinas' first-half results, business performance, and key priorities as we navigate the evolving operating environment. As a quick reminder, our quarterly report is available on the Shell Pilipinas website and through PSE Edge.

Speaker #1: But before we begin, let me briefly cover safety. At Shell, safety is fundamental to how we operate. Even in a virtual setting, please remain mindful of your surroundings and do not join the briefing while driving.

Speaker #1: If you are using an earpiece, ensure that you can still hear alarms or other important signals around you. Please also be familiar with the nearest safe exit at your location.

Joan Co: Please also be familiar with the nearest safe exit in your location. In the event of an earthquake, remember to duck, cover, and hold, and proceed to the nearest safe exit once conditions allow. Let me now introduce you to the members of management joining us today. We have Jacqueline Famorca, Vice President for Lubricants, Michael Ramolete, Vice President for Mobility and Convenience, Rey Abilo, Chief Finance Officer and Chief Risk Officer, and Lorelie Quiambao-Osial, President and Chief Executive Officer. You may submit your questions for management at any time during the presentation through the question box on your screen. We will also address as many questions as possible during the Q&A portion later in the session. With that, let me now turn your attention to our H1 2026 presentation.

Jhonna Cañeja: Please also be familiar with the nearest safe exit in your location. In the event of an earthquake, remember to duck, cover, and hold, and proceed to the nearest safe exit once conditions allow. Let me now introduce you to the members of management joining us today. We have Jackie Famorca, Vice President for Lubricants, Mike Ramolete, Vice President for Mobility and Convenience, Rey Abilo, Chief Finance Officer and Chief Risk Officer, and Lorelie Quiambao-Osial, President and Chief Executive Officer. You may submit your questions for management at any time during the presentation through the question box on your screen. We will also address as many questions as possible during the Q&A portion later in the session. With that, let me now turn your attention to our H1 2026 presentation.

Speaker #1: In the case of an earthquake, remember to duck, cover, and hold, and proceed to the nearest safe exit once conditions allow. Let me now introduce you to the members of management joining us today.

Speaker #1: We have Jackie Famorca, Vice President for Lubricants; Mike Ramolete, Vice President for Mobility and Convenience; Ray Abelo, Chief Finance Officer and Chief Risk Officer; and Laurie Kendall-Osea, President and Chief Executive Officer.

Speaker #1: You may submit your questions for management at any time during the presentation through the question box on your screen. We will also address as many questions as possible during the Q&A portion later in the session.

Speaker #1: And with that, let me now turn your attention to our first half 2026 presentation.

Speaker #2: Good morning, good afternoon, and good evening. Thank you for joining us as we present Shell Pilipinas' first half 2026 results. We are speaking to you following a particularly challenging second quarter.

Lorelie Quiambao-Osial: Good morning, good afternoon, and good evening. Thank you for joining us as we present Shell Pilipinas' H1 2026 results. We are speaking to you following a particularly challenging Q2. The conflict in the Middle East created significant volatility across global energy markets, driving oil prices sharply higher before subsequently easing, increasing uncertainty around supply resilience, and placing considerable pressure on affordability and fuel demand in the Philippines. Against this backdrop, Shell Pilipinas continued to support the country's energy needs while remaining focused on the priorities that matter most: the safety and well-being of our people, business continuity and responsible operations, and reliable supply for the motorists, transport operators, businesses, power generators, and industries that keep the economy moving.

Lorelie Quiambao Osial: Good morning, good afternoon, and good evening. Thank you for joining us as we present Shell Pilipinas' H1 2026 results. We are speaking to you following a particularly challenging Q2. The conflict in the Middle East created significant volatility across global energy markets, driving oil prices sharply higher before subsequently easing, increasing uncertainty around supply resilience, and placing considerable pressure on affordability and fuel demand in the Philippines. Against this backdrop, Shell Pilipinas continued to support the country's energy needs while remaining focused on the priorities that matter most: the safety and well-being of our people, business continuity and responsible operations, and reliable supply for the motorists, transport operators, businesses, power generators, and industries that keep the economy moving.

Speaker #2: The conflict in the Middle East created significant volatility across global energy markets, driving oil prices sharply higher before subsequently easing, increasing uncertainty around supply resilience, and placing considerable pressure on affordability and fuel demand in the Philippines.

Speaker #2: Against this backdrop, Shell Pilipinas continued to support the country's energy needs while remaining focused on the priorities that matter most: the safety and well-being of our people, business continuity and responsible operations, and reliable supply for the motorists, transport operators, businesses, power generators, and industries that keep the economy moving.

Speaker #2: While these conditions materially affected our financial performance, they also demonstrated the agility of the business and the value of the stronger financial foundation we have built over the past year.

Lorelie Quiambao-Osial: While these conditions materially affected our financial performance, they also demonstrated the agility of the business and the value of the stronger financial foundation we have built over the past year. We responded with agility as conditions evolved, shortening decision cycles, strengthening cash and working capital management, and leveraging Shell's integrated supply network to maintain operational continuity and support our customers. Guided by our Defend, Grow, Deliver strategy, we remain focused on restoring earnings and profitability, preserving financial resilience, and creating sustainable long-term shareholder value. Five messages define our H1 results. First, Shell Pilipinas continued to support the country's energy needs throughout the Middle East conflict. As concerns around the fuel availability and supply resilience intensified across Asia, we leveraged Shell's global Trading and Supply network to maintain reliable fuel supply and continue serving motorists, transport operators, businesses, power generators, and other critical industries across the Philippines.

Lorelie Quiambao Osial: While these conditions materially affected our financial performance, they also demonstrated the agility of the business and the value of the stronger financial foundation we have built over the past year. We responded with agility as conditions evolved, shortening decision cycles, strengthening cash and working capital management, and leveraging Shell's integrated supply network to maintain operational continuity and support our customers. Guided by our Defend, Grow, Deliver strategy, we remain focused on restoring earnings and profitability, preserving financial resilience, and creating sustainable long-term shareholder value. Five messages define our H1 results. First, Shell Pilipinas continued to support the country's energy needs throughout the Middle East conflict. As concerns around the fuel availability and supply resilience intensified across Asia, we leveraged Shell's global Trading and Supply network to maintain reliable fuel supply and continue serving motorists, transport operators, businesses, power generators, and other critical industries across the Philippines.

Speaker #2: We responded with agility as conditions evolved, shortening decision cycles, strengthening cash and working capital management, and leveraging Shell's integrated supply network to maintain operational continuity and support our customers.

Speaker #2: Guided by our Defend, Grow, Deliver strategy, we remain focused on restoring earnings and profitability, preserving financial resilience, and creating sustainable long-term shareholder value. Five messages define our first half results.

Speaker #2: First, Shell Pilipinas continued to support the country's energy needs throughout the Middle East conflict. As concerns around fuel availability and supply resilience intensified across Asia, we leveraged Shell's global trading and supply network to maintain a reliable fuel supply and continue serving motorists, transport operators, businesses, power generators, and other critical industries across the Philippines.

Speaker #2: Second, the extraordinary operating environment materially affected our financial performance. Heightened uncertainty around supply led market participants to secure additional volumes ahead of potential disruptions.

Lorelie Quiambao-Osial: Second, the extraordinary operating environment materially affected our financial performance. Heightened uncertainty around supply led market participants to secure additional volumes ahead of potential disruptions. As demand subsequently weakened under the weight of sharply higher fuel prices, the industry experienced significant volume and margin pressures. Demand in our business fell by more than 20% in April, contributing to a core net loss for the period. Third, the stronger financial footing we built over the past year helped us navigate the disruption from a position of resilience. Despite significant operational and working capital pressures, we generated PHP 2.4 billion in free cash flow and maintained a resilient balance sheet. Fourth, the period demonstrated the value of managing Shell Pilipinas as an integrated portfolio. We optimized supply, customer, and working capital decisions across the business, balancing fuel availability, customer continuity, cash preservation, and long-term value creation.

Lorelie Quiambao Osial: Second, the extraordinary operating environment materially affected our financial performance. Heightened uncertainty around supply led market participants to secure additional volumes ahead of potential disruptions. As demand subsequently weakened under the weight of sharply higher fuel prices, the industry experienced significant volume and margin pressures. Demand in our business fell by more than 20% in April, contributing to a core net loss for the period. Third, the stronger financial footing we built over the past year helped us navigate the disruption from a position of resilience. Despite significant operational and working capital pressures, we generated PHP 2.4 billion in free cash flow and maintained a resilient balance sheet. Fourth, the period demonstrated the value of managing Shell Pilipinas as an integrated portfolio. We optimized supply, customer, and working capital decisions across the business, balancing fuel availability, customer continuity, cash preservation, and long-term value creation.

Speaker #2: As demand subsequently weakened under the weight of sharply higher fuel prices, the industry experienced significant volume and margin pressures. Demand in our business fell by more than 20% in April, contributing to a core net loss for the period.

Speaker #2: Third, the stronger financial footing we built over the past year helped us navigate the disruption from a position of resilience, despite significant operational and working capital pressures, which generated $2.4 billion in free cash flow and maintained a resilient balance sheet.

Speaker #2: Fourth, the period demonstrated the value of managing Shell Pilipinas as an integrated portfolio. We optimized supply, customer, and working capital decisions across the business, balancing fuel availability, customer continuity, cash preservation, and long-term value to mitigate the overall impact of the disruption, while continuing to support the country's energy needs.

Lorelie Quiambao-Osial: This enabled us to mitigate the overall impact of the disruption while continuing to support the country's energy needs. Finally, we remain focused on recovery. As market conditions improved through May and June, volumes began to recover, and we continued positioning the business to restore profitability while maintaining capital discipline and financial resilience. Overall, the H1 demonstrated the importance of supply resilience, financial discipline, and enterprise-wide optimization in navigating a highly volatile operating environment. While the external challenges materially affected earnings, Shell Pilipinas remained operationally agile, continued serving the country, and strengthened its position for recovery. The Philippine economy felt the effects of the Middle East conflict during the Q2. Given Asia's significant dependence on Middle Eastern crude supplies and the Philippines' reliance on imported fuels, concerns around energy security, supply resilience, and affordability intensified across the region.

Lorelie Quiambao Osial: This enabled us to mitigate the overall impact of the disruption while continuing to support the country's energy needs. Finally, we remain focused on recovery. As market conditions improved through May and June, volumes began to recover, and we continued positioning the business to restore profitability while maintaining capital discipline and financial resilience. Overall, the H1 demonstrated the importance of supply resilience, financial discipline, and enterprise-wide optimization in navigating a highly volatile operating environment. While the external challenges materially affected earnings, Shell Pilipinas remained operationally agile, continued serving the country, and strengthened its position for recovery. The Philippine economy felt the effects of the Middle East conflict during the Q2. Given Asia's significant dependence on Middle Eastern crude supplies and the Philippines' reliance on imported fuels, concerns around energy security, supply resilience, and affordability intensified across the region.

Speaker #2: Finally, we remain focused on recovery. As market conditions improved through May and June, volumes began to recover, and we continued positioning the business to restore profitability while maintaining capital discipline and financial resilience.

Speaker #2: Overall, the first half demonstrated the importance of supply resilience, financial discipline, and enterprise-wide optimization in navigating a highly volatile operating environment. While the external challenges materially affected earnings, Shell Pilipinas remained operationally agile, continued serving the country, and strengthened its position for recovery.

Speaker #2: The Philippine economy felt the effects of the Middle East conflict during the second quarter. Given Asia's significant dependence on Middle Eastern crude supplies, and the Philippines' reliance on imported fuels, concerns around energy security, supply resilience, and affordability intensified across the region.

Speaker #2: Oil prices rose sharply in April, increasing fuel and import costs, and placing pressure on consumer spending, business activity, and inflation. At the same time, uncertainty around potential supply disruptions prompted market participants to secure additional supply volumes.

Lorelie Quiambao-Osial: Oil prices rose sharply in April, increasing fuel and import costs and placing pressure on consumer spending, business activity, and inflation. At the same time, uncertainty around potential supply disruptions prompted market participants to secure additional supply volumes. As higher prices subsequently weakened demand, the market experienced significant imbalances and volatility, particularly during the month of April. The Philippine peso weakened to around the level of 61, further increasing costs for import-dependent sectors. Inflation peaked at 7.2% in April before easing in May, while the government's growth outlook was revised downward to reflect softer consumption and investment activity. Conditions began improving through May and June as oil prices moderated and mobility recovered. However, supply resilience, Forex volatility, and demand recovery remained key uncertainties for market participants. For Shell Pilipinas, these conditions resulted in lower demand, increased working capital requirements, and pressure on earnings.

Lorelie Quiambao Osial: Oil prices rose sharply in April, increasing fuel and import costs and placing pressure on consumer spending, business activity, and inflation. At the same time, uncertainty around potential supply disruptions prompted market participants to secure additional supply volumes. As higher prices subsequently weakened demand, the market experienced significant imbalances and volatility, particularly during the month of April. The Philippine peso weakened to around the level of 61, further increasing costs for import-dependent sectors. Inflation peaked at 7.2% in April before easing in May, while the government's growth outlook was revised downward to reflect softer consumption and investment activity. Conditions began improving through May and June as oil prices moderated and mobility recovered. However, supply resilience, Forex volatility, and demand recovery remained key uncertainties for market participants. For Shell Pilipinas, these conditions resulted in lower demand, increased working capital requirements, and pressure on earnings.

Speaker #2: As higher prices subsequently weakened demand, the market experienced significant imbalances and volatility, particularly during the month of April. The Philippine peso weakened to around 61, further increasing costs for import-dependent sectors.

Speaker #2: Inflation peaked at 7.2% in April before easing in May, while the government's growth outlook was revised downward to reflect softer consumption and investment activity.

Speaker #2: Conditions began improving through May and June, as oil prices moderated and mobility recovered. However, supply resilience, foreign exchange volatility, and demand recovery remained key uncertainties for market participants.

Speaker #2: For Shell Pilipinas, these conditions resulted in lower demand, increased working capital requirements, and pressure on earnings. The period also reinforced the importance of supply resilience, global trading capability, disciplined cash management, and integrated portfolio decision-making in navigating a highly volatile environment.

Lorelie Quiambao-Osial: The period also reinforced the importance of supply resilience, global trading capability, disciplined cash management, and integrated portfolio decision-making in navigating a highly volatile environment. Our fuels business operated in an exceptionally challenging environment during the Q2. The Middle East conflict heightened concerns around fuel supply resilience across Asia, while sharply higher fuel prices weighed on affordability and significantly weakened demand, particularly in April. Against this backdrop, Shell Pilipinas remained focused on maintaining a reliable fuel supply for the country while making disciplined portfolio decisions to protect long-term shareholder value. At the same time, we managed Shell Pilipinas as one integrated system. Rather than maximizing the short-term performance of individual businesses, we optimized supply, customer, inventory, and working capital decisions across the enterprise. This enabled us to support critical sectors, preserve cash, maintain customer relationships, and mitigate the overall impact of market disruption.

Lorelie Quiambao Osial: The period also reinforced the importance of supply resilience, global trading capability, disciplined cash management, and integrated portfolio decision-making in navigating a highly volatile environment. Our fuels business operated in an exceptionally challenging environment during the Q2. The Middle East conflict heightened concerns around fuel supply resilience across Asia, while sharply higher fuel prices weighed on affordability and significantly weakened demand, particularly in April. Against this backdrop, Shell Pilipinas remained focused on maintaining a reliable fuel supply for the country while making disciplined portfolio decisions to protect long-term shareholder value. At the same time, we managed Shell Pilipinas as one integrated system. Rather than maximizing the short-term performance of individual businesses, we optimized supply, customer, inventory, and working capital decisions across the enterprise. This enabled us to support critical sectors, preserve cash, maintain customer relationships, and mitigate the overall impact of market disruption.

Speaker #2: Our fuels business operated in an exceptionally challenging environment during the second quarter. The Middle East conflict heightened concerns around fuel supply resilience across Asia, while sharply higher fuel prices weighed on affordability and significantly weakened demand, particularly in April.

Speaker #2: Against this backdrop, Shell Pilipinas remained focused on maintaining a reliable fuel supply for the country, while making disciplined portfolio decisions to protect long-term shareholder value.

Speaker #2: At the same time, we managed Shell Pilipinas as one integrated system. Rather than maximizing the short-term performance of individual businesses, we optimized supply, customer, inventory, and working capital decisions across the enterprise.

Speaker #2: This enabled us to support critical sectors, preserve cash, maintain customer relationships, and mitigate the overall impact of market disruption. Demand declined by more than 20% at the height of the disruption in April.

Lorelie Quiambao-Osial: Demand declined by more than 20% at the height of the disruption in April. As fuel prices moderated and mobility improved, recovery began in May and strengthened through June. Commercial fuels delivered 4% growth despite the difficult operating environment and achieved a record monthly volume performance in June, providing early evidence of recovery as market conditions improved. Growth was led by the power sector as tighter electricity supply conditions increased fuel demand, particularly in the Visayas. Our reseller channel also contributed positively through expanded business with independent market participants. The period reinforced the strategic importance of supply resilience in an import-dependent market. We responded quickly to changing market conditions, supporting critical sectors and directing products where demand was greatest as industry conditions evolved. This performance demonstrates the benefits of Shell Pilipinas' integrated business model.

Lorelie Quiambao Osial: Demand declined by more than 20% at the height of the disruption in April. As fuel prices moderated and mobility improved, recovery began in May and strengthened through June. Commercial fuels delivered 4% growth despite the difficult operating environment and achieved a record monthly volume performance in June, providing early evidence of recovery as market conditions improved. Growth was led by the power sector as tighter electricity supply conditions increased fuel demand, particularly in the Visayas. Our reseller channel also contributed positively through expanded business with independent market participants. The period reinforced the strategic importance of supply resilience in an import-dependent market. We responded quickly to changing market conditions, supporting critical sectors and directing products where demand was greatest as industry conditions evolved. This performance demonstrates the benefits of Shell Pilipinas' integrated business model.

Speaker #2: As fuel prices moderated and mobility improved, recovery began in May and strengthened through June. Commercial fuels delivered 4% growth despite the difficult operating environment, and achieved a record monthly volume performance in June, providing early evidence of recovery as market conditions improved.

Speaker #2: Growth was led by the power sector. Tighter electricity supply conditions increased fuel demand, particularly in the Visayas. Our reseller channel also contributed positively through expanded business with independent market participants.

Speaker #2: The period reinforced the strategic importance of supply resilience in an import-dependent market. We responded quickly to changing market conditions, supported critical sectors, and directed products where demand was greatest as industry conditions evolved.

Speaker #2: This performance demonstrates the benefits of Shell Pilipinas' integrated business model. Our ability to optimize supply, customer, and commercial decisions across the portfolio enabled us to capture growth opportunities while continuing to support the country's energy requirements.

Lorelie Quiambao-Osial: Our ability to optimize supply, customer, and commercial decisions across the portfolio enabled us to capture growth opportunities while continuing to support the country's energy requirements. Mobility volume declined by 4%, reflecting the significant demand disruption experienced during April as elevated fuel prices affected affordability, travel activity, and consumer spending. Despite these challenges, the business remained resilient. Reliable supply, targeted customer initiatives, and disciplined commercial execution helped moderate volume declines and support recovery as market conditions improved. Throughout the period, we carefully balanced customer affordability, competitive positioning, returns, and the long-term economics of the business. Retail volume declined by 5% as higher fuel prices dampened mobility and discretionary spending. To support customers and sustain mobility, we participated extensively in the government's public utility vehicle fuel discount program and implemented targeted customer offers across our network.

Lorelie Quiambao Osial: Our ability to optimize supply, customer, and commercial decisions across the portfolio enabled us to capture growth opportunities while continuing to support the country's energy requirements. Mobility volume declined by 4%, reflecting the significant demand disruption experienced during April as elevated fuel prices affected affordability, travel activity, and consumer spending. Despite these challenges, the business remained resilient. Reliable supply, targeted customer initiatives, and disciplined commercial execution helped moderate volume declines and support recovery as market conditions improved. Throughout the period, we carefully balanced customer affordability, competitive positioning, returns, and the long-term economics of the business. Retail volume declined by 5% as higher fuel prices dampened mobility and discretionary spending. To support customers and sustain mobility, we participated extensively in the government's public utility vehicle fuel discount program and implemented targeted customer offers across our network.

Speaker #2: Mobility volume declined by 4%, reflecting the significant demand disruption experienced during April as elevated fuel prices affected affordability, travel activity, and consumer spending. Despite these challenges, the business remained resilient; reliable supply, targeted customer initiatives, and disciplined commercial execution helped moderate volume declines and supported recovery as market conditions improved.

Speaker #2: Throughout the period, we carefully balanced customer affordability, competitive positioning, returns, and the long-term economics of the business. Retail volume declined by 5%, as higher fuel prices dampened mobility and discretionary spending.

Speaker #2: To support customers and sustain mobility, we participated extensively in the government's public utility vehicle fuel discount program and implemented targeted customer offers across our network.

Speaker #2: These initiatives, together with reliable supply and strong site execution, helped support customer retention and contributed to volume recovery as conditions improved through May and June.

Lorelie Quiambao-Osial: These initiatives, together with reliable supply and strong site execution, helped support customer retention and contributed to volume recovery as conditions improved through May and June. Throughout the period, we maintained pricing discipline while ensuring reliable fuel availability across our network. B2B volumes declined by 1%, demonstrating resilience despite the volatility experienced across the transport sector. We maintained uninterrupted support for existing customers while continuing to secure new business opportunities. Reliable supply, responsive service, and differentiated fleet solutions reinforced Shell's position as a trusted partner for commercial transport operations. Non-fuel retail continued to diversify mobility earnings and strengthen site economics, delivering a 2% increase in operating profit despite inflationary pressures and softer consumer spending. The diversification of the portfolio helped provide a stable earnings contribution during a period of heightened volatility across fuel markets. Lubricants remained the largest contributor to NFR earnings, with operating profit increasing by 3%.

Lorelie Quiambao Osial: These initiatives, together with reliable supply and strong site execution, helped support customer retention and contributed to volume recovery as conditions improved through May and June. Throughout the period, we maintained pricing discipline while ensuring reliable fuel availability across our network. B2B volumes declined by 1%, demonstrating resilience despite the volatility experienced across the transport sector. We maintained uninterrupted support for existing customers while continuing to secure new business opportunities. Reliable supply, responsive service, and differentiated fleet solutions reinforced Shell's position as a trusted partner for commercial transport operations. Non-fuel retail continued to diversify mobility earnings and strengthen site economics, delivering a 2% increase in operating profit despite inflationary pressures and softer consumer spending. The diversification of the portfolio helped provide a stable earnings contribution during a period of heightened volatility across fuel markets. Lubricants remained the largest contributor to NFR earnings, with operating profit increasing by 3%.

Speaker #2: Throughout the period, we maintained pricing discipline while ensuring reliable fuel availability across our network. B2B volumes declined by 1%, demonstrating resilience despite the volatility experienced across the transport sector.

Speaker #2: We maintained uninterrupted support for existing customers while continuing to secure new business opportunities. Reliable supply, responsive service, and differentiated fleet solutions reinforced Shell's position as a trusted partner for commercial transport operations.

Speaker #2: Non-fuel retail continued to diversify mobility earnings and strengthen site economics, delivering a 2% increase in operating profit despite inflationary pressures and softer consumer spending.

Speaker #2: The diversification of the portfolio helped provide a stable earnings contribution during a period of heightened volatility across fuel markets. Lubricants remained the largest contributor to NFR earnings, with operating profit increasing by 3%.

Speaker #2: Growth was supported by continued demand for lubricant products and oil change services across both two-wheel and four-wheel segments, as well as the ongoing expansion of the Shell service center network, which strengthened customer engagement and retention.

Lorelie Quiambao-Osial: Growth was supported by continued demand for lubricant products and oil change services across both two-wheel and four-wheel segments, as well as the ongoing expansion of the Shell Service Center network, which strengthened customer engagement and retention. Alliance operating profit grew by 4%, driven by newly secured co-locators and continued optimization of existing partnerships across the network, supporting both site traffic and overall profitability. Convenience retail operating profit declined by 4%, reflecting weaker discretionary spending and reduced consumer demand as higher fuel and living costs affected household budgets. Overall, non-fuel retail remained a resilient contributor to earnings, helping offset pressure on fuel-related businesses while supporting the long-term value of the mobility portfolio. Aviation volume declined by 12% as elevated fuel prices, a stronger USD, route disruptions, and softer travel demand affected airline activity. While volumes improved toward the end of the quarter, they remained below pre-conflict levels.

Lorelie Quiambao Osial: Growth was supported by continued demand for lubricant products and oil change services across both two-wheel and four-wheel segments, as well as the ongoing expansion of the Shell Service Center network, which strengthened customer engagement and retention. Alliance operating profit grew by 4%, driven by newly secured co-locators and continued optimization of existing partnerships across the network, supporting both site traffic and overall profitability. Convenience retail operating profit declined by 4%, reflecting weaker discretionary spending and reduced consumer demand as higher fuel and living costs affected household budgets. Overall, non-fuel retail remained a resilient contributor to earnings, helping offset pressure on fuel-related businesses while supporting the long-term value of the mobility portfolio. Aviation volume declined by 12% as elevated fuel prices, a stronger USD, route disruptions, and softer travel demand affected airline activity. While volumes improved toward the end of the quarter, they remained below pre-conflict levels.

Speaker #2: Alliance operating profit grew by 4%, driven by newly secured co-locators and continued optimization of existing partnerships across the network, supporting both site traffic and overall profitability.

Speaker #2: Convenience retail operating profit declined by 4%, reflecting weaker discretionary spending and reduced consumer demand as higher fuel and living costs affected household budgets. Overall, non-fuel retail remained a resilient contributor to earnings, helping offset pressure on fuel-related businesses while supporting the long-term value of the mobility portfolio.

Speaker #2: Aviation volume declined by 12%, as elevated fuel prices, a stronger US dollar, route disruptions, and softer travel demand affected airline activity. While volumes improved toward the end of the quarter, they remained below pre-conflict levels.

Speaker #2: We continued working closely with airline customers, maintaining reliable service while carefully managing commercial and working capital exposure. Our non-fuels portfolio declined by 20%, primarily driven by significantly lower bitumen volumes, as infrastructure activity slowed and government spending priorities shifted during this period.

Lorelie Quiambao-Osial: We continued working closely with airline customers, maintaining reliable service while carefully managing commercial and working capital exposure. Our non-fuels portfolio declined by 20%, primarily driven by significantly lower bitumen volumes as infrastructure activity slowed and government spending priorities shifted during this period. Despite these headwinds, lubricants delivered volume growth and continued to demonstrate the diversification of the portfolio, partially offsetting the impact of weaker bitumen performance. Lubricants volume grew by 8% year-on-year, reflecting the strength of our premium brands and customer proposition. Shell Helix increased by 10%, while Shell Advance grew by 16%, supported by sustained demand across both automotive and industrial segments. We continued expanding our customer reach, adding 10 workshops during the H1. These investments strengthened market access, customer engagement, and long-term growth prospects while supporting product penetration and loyalty.

Lorelie Quiambao Osial: We continued working closely with airline customers, maintaining reliable service while carefully managing commercial and working capital exposure. Our non-fuels portfolio declined by 20%, primarily driven by significantly lower bitumen volumes as infrastructure activity slowed and government spending priorities shifted during this period. Despite these headwinds, lubricants delivered volume growth and continued to demonstrate the diversification of the portfolio, partially offsetting the impact of weaker bitumen performance. Lubricants volume grew by 8% year-on-year, reflecting the strength of our premium brands and customer proposition. Shell Helix increased by 10%, while Shell Advance grew by 16%, supported by sustained demand across both automotive and industrial segments. We continued expanding our customer reach, adding 10 workshops during the H1. These investments strengthened market access, customer engagement, and long-term growth prospects while supporting product penetration and loyalty.

Speaker #2: Despite these headwinds, lubricants delivered volume growth and continued to demonstrate the diversification of the portfolio, partially offsetting the impact of weaker bitumen performance. Lubricants volume grew by 8% year-on-year, reflecting the strengths of our premium brands and customer proposition.

Speaker #2: Shell Helix increased by 10%, while Shell Advance grew by 16%, supported by sustained demand across both automotive and industrial segments. We continued expanding our customer reach, adding 10 workshops during the first half.

Speaker #2: These investments strengthened market access, customer engagement, and long-term growth prospects, while supporting product penetration and loyalty. We also continued investing in customer and industry capability development through partnerships with organizations such as the Technical Education and Skills Development Authority, or TESDA, and the Land Transport Office, or LTO, including the relaunch of the Shell Mechanical Lean and other industry engagement programs.

Lorelie Quiambao-Osial: We also continued investing in customer and industry capability development through partnerships with organizations such as the Technical Education and Skills Development Authority, or TESDA, and the Land Transportation Office, or LTO, including the relaunch of the Shell Mekaniko League and other industry engagement programs. Together with initiatives such as the Rimula Caravan, these efforts helped strengthen relationships with mechanics, drivers, and fleet operators while reinforcing trust in the Shell brand. Overall, lubricants remain a resilient contributor to portfolio performance, demonstrating the strength of our brands, customer relationships, and route-to-market strategy. Bitumen volume declined by nearly 50% as infrastructure activity slowed, project award timelines shifted, and public sector spending priorities adjusted in response to broader economic pressures. In this environment, we remain disciplined in opportunity selection, focusing on protecting profitability, managing risk, and maintaining strong relationships with key contractors and project partners.

Lorelie Quiambao Osial: We also continued investing in customer and industry capability development through partnerships with organizations such as the Technical Education and Skills Development Authority, or TESDA, and the Land Transportation Office, or LTO, including the relaunch of the Shell Mekaniko League and other industry engagement programs. Together with initiatives such as the Rimula Caravan, these efforts helped strengthen relationships with mechanics, drivers, and fleet operators while reinforcing trust in the Shell brand. Overall, lubricants remain a resilient contributor to portfolio performance, demonstrating the strength of our brands, customer relationships, and route-to-market strategy. Bitumen volume declined by nearly 50% as infrastructure activity slowed, project award timelines shifted, and public sector spending priorities adjusted in response to broader economic pressures. In this environment, we remain disciplined in opportunity selection, focusing on protecting profitability, managing risk, and maintaining strong relationships with key contractors and project partners.

Speaker #2: Together with initiatives such as the Rimola Caravan, these efforts helped strengthen relationships with mechanics, drivers, and fleet operators, while reinforcing trust in the Shell brand.

Speaker #2: Overall, lubricants remained a resilient contributor to portfolio performance, demonstrating the strengths of our brands, customer relationships, and route-to-market strategy. Bitumen volume declined by nearly 50%, as infrastructure activity slowed, project award timelines shifted, and public sector spending priorities adjusted in response to broader economic pressures.

Speaker #2: In this environment, we focused on selection, prioritizing the protection of profitability, managing risk, and maintaining strong relationships with key contractors and project partners. While market conditions remained challenging during the period, we continued to see bitumen as an important long-term growth opportunity aligned with the country's infrastructure development needs.

Lorelie Quiambao-Osial: While market conditions remained challenging during the period, we continue to see bitumen as an important long-term growth opportunity aligned with the country’s infrastructure development needs. Trading and Supply played a critical role in helping Shell Pilipinas navigate one of the most volatile operating environments in recent years. The Middle East conflict heightened concerns around fuel supply resilience across Asia, particularly for import-dependent markets such as the Philippines. As market conditions evolve rapidly, access to reliable supply flexibility, and effective working capital management became increasingly important. Against this backdrop, we leveraged Shell’s integrated Trading and Supply capabilities to maintain product availability, support our customers, and provide continuity of supply across our businesses. This ensured that we could continue serving motorists, transport operators, power generators, businesses, and other critical sectors despite significant uncertainty in regional energy markets. The quarter demonstrated that supply resilience is not simply about securing product.

Lorelie Quiambao Osial: While market conditions remained challenging during the period, we continue to see bitumen as an important long-term growth opportunity aligned with the country’s infrastructure development needs. Trading and Supply played a critical role in helping Shell Pilipinas navigate one of the most volatile operating environments in recent years. The Middle East conflict heightened concerns around fuel supply resilience across Asia, particularly for import-dependent markets such as the Philippines. As market conditions evolve rapidly, access to reliable supply flexibility, and effective working capital management became increasingly important. Against this backdrop, we leveraged Shell’s integrated Trading and Supply capabilities to maintain product availability, support our customers, and provide continuity of supply across our businesses. This ensured that we could continue serving motorists, transport operators, power generators, businesses, and other critical sectors despite significant uncertainty in regional energy markets. The quarter demonstrated that supply resilience is not simply about securing product.

Speaker #2: Trading and supply played a critical role in helping Shell Pilipinas navigate one of the most volatile operating environments in recent years. The Middle East conflict heightened concerns around fuel supply resilience across Asia, particularly for import-dependent markets such as the Philippines.

Speaker #2: As market conditions evolve rapidly, access to reliable supply, supply flexibility, and effective working capital management became increasingly important. Against this backdrop, we leveraged Shell's integrated trading and supply capabilities to maintain product availability, support our customers, and provide continuity of supply across our businesses.

Speaker #2: This ensured that we could continue serving motorists, transport operators, power generators, businesses, and other critical sectors despite significant uncertainty in regional energy markets. The quarter demonstrated that supply resilience is not simply about securing product; it is about making disciplined decisions across sourcing, inventory, logistics, customer allocation, and working capital as market conditions evolve.

Lorelie Quiambao-Osial: It is about making disciplined decisions across sourcing, inventory, logistics, customer allocation, and working capital as market conditions evolve. Through close coordination across these areas, we were able to respond quickly, direct resources where they were most needed, and support the overall performance of the enterprise. This capability also enabled us to manage Shell Pilipinas as an integrated portfolio. We balanced fuel availability, customer commitments, cash preservation, and commercial opportunities across businesses rather than optimizing individual segments in isolation, helping mitigate the overall impact of the disruption. During the Q2, we also completed the sale of the remaining crude inventory from our decommissioned refinery. This unlocked value from a legacy asset and contributed additional volumes, resulting in supply volumes more than doubling year-on-year. Overall, the period reinforced the strategic importance of Shell Trading and Supply to Shell Pilipinas.

Lorelie Quiambao Osial: It is about making disciplined decisions across sourcing, inventory, logistics, customer allocation, and working capital as market conditions evolve. Through close coordination across these areas, we were able to respond quickly, direct resources where they were most needed, and support the overall performance of the enterprise. This capability also enabled us to manage Shell Pilipinas as an integrated portfolio. We balanced fuel availability, customer commitments, cash preservation, and commercial opportunities across businesses rather than optimizing individual segments in isolation, helping mitigate the overall impact of the disruption.

Speaker #2: Through close coordination across these areas, we were able to respond quickly, direct resources where they were most needed, and support the overall performance of the enterprise.

Speaker #2: This capability also enabled us to manage Shell Pilipinas as an integrated portfolio, with balanced fuel availability, customer commitments, cash preservation, and commercial opportunities across businesses, rather than optimizing individual segments in isolation.

Speaker #2: Helping mitigate the overall impact of the disruption. During the second quarter, we also completed the sale of the remaining crude inventory from our decommissioned refinery.

Lorelie Quiambao Osial: During the Q2, we also completed the sale of the remaining crude inventory from our decommissioned refinery. This unlocked value from a legacy asset and contributed additional volumes, resulting in supply volumes more than doubling year-on-year. Overall, the period reinforced the strategic importance of Shell Trading and Supply to Shell Pilipinas. Beyond maintaining continuity of supply, the capability strengthened our operational strength, supported cash preservation, enabled portfolio optimization, and helped position the business for recovery as market conditions improve. With that, I will now hand over to our CFO and CRO, Rey Abilo, who will take us through Shell Pilipinas' financial results for the H1 of 2026.

Speaker #2: This unlocked value from a legacy asset and contributed additional volumes, resulting in supply volumes more than doubling year-on-year. Overall, the period reinforced the strategic importance of Shell Trading and Supply to Shell Pilipinas.

Speaker #2: Beyond maintaining continuity of supply, the capability strengthened our operational strengths, supported cash preservation, enabled portfolio optimization, and helped position the business for recovery as market conditions improved.

Lorelie Quiambao-Osial: Beyond maintaining continuity of supply, the capability strengthened our operational strength, supported cash preservation, enabled portfolio optimization, and helped position the business for recovery as market conditions improve. With that, I will now hand over to our CFO and CRO, Rey Abilo, who will take us through Shell Pilipinas' financial results for the H1 of 2026.

Speaker #2: With that, I will now hand over to our CFO and CRO, Ray Abilo, who will take us through Shell Pilipinas' financial results for the first half of 2026.

Speaker #1: Thank you, Lorely. The second quarter was a clear test of the financial resilience we had built over the preceding periods. The war in the Middle East created a highly unusual combination of demand destruction, rapidly rising product costs that would subsequently decline, pricing pressure, supply disruption, and substantially higher working capital requirements.

Rey Abilo: Thank you, Lorelie. The Q2 was a clear test of the financial resilience we had built over the preceding periods. The war in the Middle East created a highly unusual combination of demand destruction, rapidly rising product costs that would subsequently decline, pricing pressure, supply disruption, and substantially higher working capital requirements. The performance of individual businesses should therefore be viewed within the context of the integrated decisions made. We prioritize the best overall outcome for Shell Pilipinas, balancing fuel availability, customer continuity, cash preservation, risk management, and the long-term value of the portfolio. While these conditions materially affected earnings, our ability to maintain positive free cash flow and a resilient balance sheet enabled us to continue supporting customers and sustaining operations throughout the period.

Speaker #1: The performance of individual businesses should, therefore, be viewed within the context of the integrated decisions made. We prioritized the best overall outcome for Shell Pilipinas, balancing fuel availability, customer continuity, cash preservation, risk management, and the long-term value of the portfolio.

Speaker #1: While these conditions materially affected earnings, our ability to maintain positive pre-cash flow and a resilient balance sheet enabled us to continue supporting customers and sustaining operations throughout the period.

Speaker #1: We recorded a core net loss of $1.9 billion for the first half of the year, down from the $2 billion core earnings in the prior year.

Rey Abilo: We recorded a core net loss of PHP 1.9 billion for the H1 of the year, down from the PHP 2 billion core earnings in the prior year. The primary drivers were demand destruction, particularly during April and part of May, and the timing lag between rapidly rising global product costs and local market pricing. Reported net loss stood at PHP 2.7 billion, compared with a net income of PHP 1 billion in the prior year. The difference between reported and core results mainly reflects approximately PHP 1 billion of inventory holding losses as oil prices declined following the sharp increases earlier in the period. This was partially offset by around PHP 0.6 billion of one-off gains from the sale of remaining crude inventory in the Q2. These adjustments reflect the impact of oil price movements and non-recurring items on reported results.

Speaker #1: The primary drivers were demand destruction, particularly during April and part of May, and the timing lag between rapidly rising global product costs and local market pricing.

Speaker #1: Reported net loss to $2.7 billion, compared with net income of $1 billion in the prior year. The difference between reported and core results mainly reflects approximately $1 billion of inventory holding losses, as oil prices declined following the sharp increases earlier in the period.

Speaker #1: This was partially offset by around $0.6 billion of one-off gains from the sale of remaining crude inventory in the second quarter. These adjustments reflect the impact of oil price movements and non-recurring items on reported results.

Speaker #1: Core performance provides an additional view of the underlying operating performance of the business. Despite significant operational disruption and higher working capital requirements, we generated $2.4 billion in pre-cash flow during the first half.

Rey Abilo: Core performance provides an additional view of the underlying operating performance of the business. Despite significant operational disruption and higher working capital requirements, we generated PHP 2.4 billion in free cash flow during the H1. Although 52% lower than the PHP 5 billion generated in the prior year due to lower earnings. Cash generation was supported by disciplined management of payables and inventory, careful control of capital and operating expenditures, strong Q1 delivery, and a PHP 4.2 billion tax refund received earlier in the year. While a tax refund was an important contributor, positive free cash flow also reflects the cash discipline embedded across the business. The stronger financial footing built in prior periods enabled us to preserve liquidity, maintain supply continuity, and manage integrated portfolio toward the best overall outcome for Shell Pilipinas while retaining financial flexibility.

Speaker #1: Although 52% lower than the $5 billion generated in the prior year due to lower earnings, cash generation was supported by disciplined management of payables and inventory, careful control of capital and operating expenditures, strong first quarter delivery, and a $4.2 billion tax refund received earlier in the year.

Speaker #1: While the tax refund was an important contributor, positive pre-cash flow also reflects the cash discipline embedded across the business. The stronger financial footing built in prior periods enabled us to preserve liquidity, maintain supply continuity, and manage the integrated portfolio toward the best overall outcome for Shell Pilipinas, while retaining financial flexibility.

Speaker #1: During the period, ended at 53%, compared with 51% in the prior year, mainly driven by the net loss curve. Net debt increased slightly by approximately $770 million year-on-year, reflecting the higher working capital requirements needed to maintain supply and support customers throughout the disruption.

Rey Abilo: Gearing ended at 53% for the period, compared with 51% in the prior year, mainly driven by the net loss incurred. Net debt increased slightly by approximately PHP 770 million year-on-year, reflecting the higher working capital requirements needed to maintain supply and support customers throughout the disruption. While gearing increased, it remains manageable, supported by continued positive cash generation, and our focus remains on maintaining funding flexibility, restoring balance sheet strength as working capital requirements normalize. Return on average capital employed or ROACE stood at 2%, reflecting the reported net loss for the period. Core ROACE stood at approximately 4%, excluding inventory holding effects and one-off items. The reduction reflects the margin compression experienced during the Q2 rather than a change in our long-term approach to capital discipline and efficiency.

Speaker #1: While gearing increased, it remains manageable, supported by continued positive cash generation. Our focus remains on maintaining funding flexibility and restoring balance sheet strength as working capital requirements normalize.

Speaker #1: Return on average capital employed for watches is at 2%, reflecting the reported net loss for the period. Core watches are at approximately 4%, excluding inventory holding effects and one-off items.

Speaker #1: The reduction reflects the margin compression experienced during the second quarter, rather than a change in our long-term approach to capital discipline and efficiency. As operating conditions improve, our focus is to restore returns through stronger earnings, improve cash conversion, make selective investments, and continue optimizing the asset base.

Rey Abilo: As operating conditions improve, our focus is to restore returns through stronger earnings, improve cash conversion, selective investments, and continued optimization of the asset base. Our balance sheet remained resilient during the Q2. This resilience was built through several periods of stronger cash generation, net debt reduction, careful capital management, and improved working capital execution. That stronger footing enabled us to navigate the effects of the war while maintaining supply reliability, supporting customers, and preserving strategic flexibility. It also allowed management to optimize the portfolio based on the best overall outcome for Shell Pilipinas. Looking ahead, our priorities remain clear: sustained volume recovery, strengthen cash generation, maintain disciplined capital allocation, continue improving operational performance, and manage risks effectively amidst a fluid external environment. We remain adaptive in how we manage capital, working capital, pricing, supply, and costs as conditions evolve.

Speaker #1: Our balance sheet remained resilient during the second quarter. This resilience was built through several periods of stronger cash generation, net debt reduction, careful capital management, and improved working capital execution.

Speaker #1: That stronger footing enabled us to navigate the effects of the war while maintaining supply reliability, supporting customers, and preserving strategic flexibility. It also allowed management to optimize the portfolio based on the best overall outcome for Shell Pilipinas.

Speaker #1: Looking ahead, our priorities remain clear: sustained volume recovery, strengthened cash generation, maintaining disciplined capital allocation, continued improvement of operational performance, and effective risk management amidst a fluid external environment.

Speaker #1: We remain adaptive in how we manage capital, working capital, pricing, supply, and costs as conditions evolve. In March, we will resume dividend distributions following our 2025 results, reflecting the progress made in restoring cash generation, reducing leverage, and strengthening the balance sheet.

Rey Abilo: In March, we resumed dividend distributions following our 2025 results, reflecting the progress made in restoring cash generation, reducing leverage, and strengthening the balance sheet. Our long-term objective remains to establish a sustainable semi-annual dividend payout cadence. Given the H1 net loss and the fluid operating environment, we are taking a measured approach to preserve financial flexibility. Our dividend strategy remains unchanged. The current approach reflects disciplined timing and capital allocation. Our objective is to build a meaningful, recurring, and sustainable dividend program supported by durable earnings, consistent cash generation, and a resilient balance sheet. I will now hand the presentation back to our President and CEO, Lorelie Quiambao-Osial.

Speaker #1: Our long-term objective remains to establish a sustainable semi-annual dividend payout cadence. Given the first-half net loss and the fluid operating environment, we are taking a measured approach to preserve financial flexibility.

Speaker #1: Our dividend strategy remains unchanged. The current approach reflects disciplined timing and capital allocation. Our objective is to build a meaningful, recurring, and sustainable dividend program supported by durable earnings, consistent cash generation, and a resilient balance sheet.

Speaker #1: I will now hand the presentation back to our President and CEO, Lori Lee.

Speaker #2: As we look forward, our priorities remain unchanged: protecting the safety and well-being of our people, ensuring business continuity and responsible operations, maintaining a reliable fuel supply for the country, and creating sustainable value for our shareholders.

Lorelie Quiambao-Osial: As we look forward, our priorities remain unchanged: protecting the safety and well-being of our people, ensuring business continuity and responsible operations, maintaining reliable fuel supply for the country, and creating sustainable value for our shareholders. The H1 presented one of the most challenging operating environments in recent years. The Middle East conflict tested energy supply resilience across Asia, increased volatility throughout energy markets, disrupted demand, and placed significant pressure on earnings and working capital across the industry. Despite these conditions, Shell Pilipinas remained resilient. We maintained fuel availability, continued serving critical sectors of the economy, and supported customers throughout the disruption. Importantly, despite reporting a net loss, we generated PHP 2.4 billion in free cash flow and maintained a resilient balance sheet.

Lorelie Quiambao Osial: As we look forward, our priorities remain unchanged: protecting the safety and well-being of our people, ensuring business continuity and responsible operations, maintaining reliable fuel supply for the country, and creating sustainable value for our shareholders. The H1 presented one of the most challenging operating environments in recent years. The Middle East conflict tested energy supply resilience across Asia, increased volatility throughout energy markets, disrupted demand, and placed significant pressure on earnings and working capital across the industry. Despite these conditions, Shell Pilipinas remained resilient. We maintained fuel availability, continued serving critical sectors of the economy, and supported customers throughout the disruption. Importantly, despite reporting a net loss, we generated PHP 2.4 billion in free cash flow and maintained a resilient balance sheet.

Speaker #2: The first half presented one of the most challenging operating environments in recent years. The Middle East conflict tested energy supply resilience across Asia, increased volatility throughout energy markets, disrupted demand, and placed significant pressure on earnings and working capital across the industry.

Speaker #2: Despite these conditions, Shell Pilipinas remained resilient. We maintained fuel availability, continued serving critical sectors of the economy, and supported customers throughout the disruption. Importantly, despite reporting a net loss, we generated $2.4 billion in free cash flow and maintained a resilient balance sheet.

Speaker #2: These outcomes reflected the stronger financial foundation we have built over the past year, the strength of Shell's integrated trading and supply capabilities, and the disciplined execution of our teams across the business.

Lorelie Quiambao-Osial: These outcomes reflected the stronger financial foundation we have built over the past year, the strength of Shell's integrated trading and supply capabilities, and the disciplined execution of our teams across the business. The period also demonstrated the value of managing Shell Pilipinas as an integrated portfolio. By optimizing decisions across supply, customers, inventory, capital, and working capital, we balance energy security, customer commitments, cash preservation, and long-term shareholder value while mitigating the overall impact of the disruption. While uncertainties remain, conditions improved through May and June, and recovery has begun across several parts of the portfolio. We remain focused on restoring volumes and profitability, strengthening cash generation, maintaining disciplined capital allocation, and building a more resilient business for the future. The H1 was a test of our business model.

Lorelie Quiambao Osial: These outcomes reflected the stronger financial foundation we have built over the past year, the strength of Shell's integrated trading and supply capabilities, and the disciplined execution of our teams across the business. The period also demonstrated the value of managing Shell Pilipinas as an integrated portfolio. By optimizing decisions across supply, customers, inventory, capital, and working capital, we balance energy security, customer commitments, cash preservation, and long-term shareholder value while mitigating the overall impact of the disruption. While uncertainties remain, conditions improved through May and June, and recovery has begun across several parts of the portfolio.

Speaker #2: The period also demonstrated the value of managing Shell Pilipinas as an integrated portfolio. By optimizing decisions across supply, customers, inventory, capital, and working capital, we balanced energy security, customer commitments, cash preservation, and long-term shareholder value, while mitigating the overall impact of the disruption.

Speaker #2: While uncertainties remain, conditions improved through May and June, and recovery has begun across several parts of the portfolio. We remain focused on restoring volumes and profitability, strengthening cash generation, maintaining disciplined capital allocation, and building a more resilient business for the future.

Lorelie Quiambao Osial: We remain focused on restoring volumes and profitability, strengthening cash generation, maintaining disciplined capital allocation, and building a more resilient business for the future. The H1 was a test of our business model. While it materially affected earnings, it also demonstrated the value of our supply resilience, financial discipline, and integrated portfolio management. These capabilities give us confidence in our ability to recover, compete, and create long-term shareholder value. Thank you for your continued trust and confidence in Shell Pilipinas. We are now ready to take your questions.

Speaker #2: The first half was a test of our business model. While it materially affected earnings, it also demonstrated the value of our supply resilience, financial discipline, and integrated portfolio management.

Lorelie Quiambao-Osial: While it materially affected earnings, it also demonstrated the value of our supply resilience, financial discipline, and integrated portfolio management. These capabilities give us confidence in our ability to recover, compete, and create long-term shareholder value. Thank you for your continued trust and confidence in Shell Pilipinas. We are now ready to take your questions.

Speaker #2: These capabilities give us confidence in our ability to recover, compete, and create long-term shareholder value. Thank you for your continued trust and confidence in Shell Pilipinas.

Speaker #2: We are now ready to take your questions.

Speaker #3: Thank you, Lori Lee and Ray. We will now proceed with the Q&A portion of today's meeting. I can see that we already have a good number of questions coming in through Menti, and thank you to everyone who has submitted questions so far.

Joan Co: Thank you, Lorelie and Rey. We will now proceed with the Q&A portion of today's listing. I can see that we already have a good number of questions coming in through Mentimeter. Thank you to everyone who has submitted questions so far. Please continue sending them in throughout the session, and we will address as many as we can with our remaining time. Where there are similar questions, I may consolidate them around the comments. Let me start with a question on the recovery of the business. Miker, how do you expect the business to recover from the net loss reported for the period?

Jhonna Cañeja: Thank you, Lorelie and Rey. We will now proceed with the Q&A portion of today's listing. I can see that we already have a good number of questions coming in through Mentimeter. Thank you to everyone who has submitted questions so far. Please continue sending them in throughout the session, and we will address as many as we can with our remaining time. Where there are similar questions, I may consolidate them around the comments. Let me start with a question on the recovery of the business. Miker, how do you expect the business to recover from the net loss reported for the period?

Speaker #3: Please continue sending them in throughout the session, and we will address as many as we can with our remaining time. Where there are similar questions, I may consolidate them around a common topic.

Speaker #3: So let me start with a question on the recovery of the business. Michael, how do you expect the business to recover from the net loss reported for the period?

Speaker #1: Thank you, Jonah. Our path to profitability is focused on three things: one, recovering margins; two, maximizing commercial opportunities; and three, sustaining volume momentum.

Michael Ramolete: Thank you, Jonah. Our path to profitability is focused on three things. One is recovering margins, two, maximizing commercial opportunities, and the third is sustaining volume momentum. Our businesses in commercial fuels and lubricants continued to deliver volume growth despite the very challenging environment, supported by power sector demand, reseller growth, and strong customer retention and new customer wins. Mobility, on the other hand, began recovering from the sharp demand disruption in April as fuel prices eased and travel activity normalized. Our focus going forward are profitable volume growth, margin management, cost discipline, and very importantly, cash generation. However, we remain mindful of government fuel price interventions, which can affect the timing of cost recovery and margins, as well as the continuing market price volatility. Back to you, Jonah.

Speaker #1: Our businesses in commercial fuels and lubricants continue to deliver volume growth, despite the very challenging environment. This is supported by power sector demand, reseller growth, strong customer retention, and new customer wins.

Speaker #1: Mobility, on the other hand, began recovering from the sharp demand disruption in April, as fuel prices eased and travel activity normalized. So our focus going forward is profitable volume growth, margin management, cost discipline, and, very importantly, cash generation.

Speaker #1: However, we remain mindful of government fuel price interventions, which can affect the timing of cost recovery and margins, as well as the continuing market price volatility.

Speaker #1: Back to you, Jonah.

Speaker #3: Thank you, Michael. You mentioned the importance of sustaining volume momentum and converting that into profitability. One of the questions coming through also asks about the supply side of that equation.

Joan Co: Thank you, Miker. You mentioned the importance of sustaining volume momentum and converting that into profitability. One of the questions coming through also asked about the supply side of that equation, particularly during the period of tight global availability. Lorrie, how did Trading and Supply maintain supply continuity during Q2 despite the tight global market?

Jhonna Cañeja: Thank you, Miker. You mentioned the importance of sustaining volume momentum and converting that into profitability. One of the questions coming through also asked about the supply side of that equation, particularly during the period of tight global availability. Lorrie, how did Trading and Supply maintain supply continuity during Q2 despite the tight global market?

Speaker #3: So, particularly during the period of tight global availability. So Lori, how did Trading and Supply maintain supply continuity during the second quarter, despite the tight global market?

Speaker #4: Hello, everyone. Aside from three things with regard to that question, one is our global reach, second is local infrastructure, and the third one is disciplined inventory management.

Lorelie Quiambao-Osial: Hello, everyone. I will cite three things with regards to the question. One is our global reach, second is local infrastructure, and the third one is disciplined inventory management. Our ability to manage supply continuity was largely driven by SPC's integrated supply model and our global Trading and Supply network. Throughout the early part of this year, Trading and Supply worked very closely with our different businesses to anticipate demand requirements, prioritize critical needs, and to position supply where it was needed the most. At the same time, we leveraged on Shell's global trading capabilities. As you know, globally, Shell has one of the more extensive trading networks in the world. That allowed us diversified sourcing options and a logistics network that allowed us to secure product and adjust supply flows as the market conditions evolved.

Lorelie Quiambao Osial: Hello, everyone. I will cite three things with regards to the question. One is our global reach, second is local infrastructure, and the third one is disciplined inventory management. Our ability to manage supply continuity was largely driven by SPC's integrated supply model and our global Trading and Supply network. Throughout the early part of this year, Trading and Supply worked very closely with our different businesses to anticipate demand requirements, prioritize critical needs, and to position supply where it was needed the most. At the same time, we leveraged on Shell's global trading capabilities. As you know, globally, Shell has one of the more extensive trading networks in the world. That allowed us diversified sourcing options and a logistics network that allowed us to secure product and adjust supply flows as the market conditions evolved.

Speaker #4: Now, our ability to manage supply continuity was largely driven by SEC's integrated supply model and our global trading and supply network. Throughout the early part of this year, Trading and Supply worked very closely with our different businesses to anticipate demand requirements, prioritize critical needs, and position supply where it was needed the most.

Speaker #4: Now, at the same time, we leveraged Shell's global trading capabilities. As you know, globally, Shell has one of the most extensive trading networks in the world.

Speaker #4: Now, that allowed us to diversify sources of options, and a logistics network that allowed us to secure product and adjust supply flows as the market conditions evolved.

Speaker #4: And as you all know, it was quite a long while during that time. Now, this provided us and allowed us greater flexibility, versus if you had to rely only on a limited number of sources.

Lorelie Quiambao-Osial: As you all know, it was quite volatile during that time. This provided us and allowed us greater flexibility, versus if you had to rely only on a limited number of sources. The combination, as I mentioned at the start, of the global reach, of the local infrastructure, and the disciplined inventory management, really enabled us to maintain uninterrupted supply, which led us to be able to supply our customers and the country's energy needs, and also allowed us to respond fairly quickly to the changing market conditions while managing our capital comfortably.

Lorelie Quiambao Osial: As you all know, it was quite volatile during that time. This provided us and allowed us greater flexibility, versus if you had to rely only on a limited number of sources. The combination, as I mentioned at the start, of the global reach, of the local infrastructure, and the disciplined inventory management, really enabled us to maintain uninterrupted supply, which led us to be able to supply our customers and the country's energy needs, and also allowed us to respond fairly quickly to the changing market conditions while managing our capital comfortably.

Speaker #4: So the combination, as I mentioned at the start, of the global reach, the local infrastructure, and disciplined inventory management really enabled us to maintain uninterrupted supply, which led us to be able to supply our customers and the country's energy needs.

Speaker #4: It also allowed us to respond fairly quickly to changing market conditions while managing our capital flows.

Speaker #3: Thank you, Lori Lee. Staying with supply, there's actually a follow-up question here asking whether those conditions have already normalized. So, are you still seeing supply tightness following the disruption in the Middle East?

Joan Co: Thank you, Lorrie. Staying with supply, there is actually a follow-up question here asking whether those conditions have already normalized. Are you still seeing supply tightness following the disruption in the Middle East?

Jhonna Cañeja: Thank you, Lorrie. Staying with supply, there is actually a follow-up question here asking whether those conditions have already normalized. Are you still seeing supply tightness following the disruption in the Middle East?

Speaker #4: I guess there are different dimensions, I guess, to that question. I mean, for fuels, the extreme tightness that we saw during the peak of the disruption has eased.

Lorelie Quiambao-Osial: I guess there are different dimensions, I guess, to that question. I mean, for fuels, the extreme tightness that we saw during the peak of the disruption has eased. That being said, the underlying geopolitical risks have not disappeared, and market conditions can still change rapidly. Our focus remains on ensuring supply continuity and maintaining the flexibility to be able to respond to changing circumstances. For lubricants, certain products continue to experience product-specific constraints, and this is true to the nature of the different supply chains of some of our products and the manufacturing footprint relating to those products. We are actively managing these constraints, prioritizing our customer requirements, and we continue to leverage Shell's global network to also minimize disruptions and maintain continuity of our customers.

Lorelie Quiambao Osial: I guess there are different dimensions, I guess, to that question. I mean, for fuels, the extreme tightness that we saw during the peak of the disruption has eased. That being said, the underlying geopolitical risks have not disappeared, and market conditions can still change rapidly. Our focus remains on ensuring supply continuity and maintaining the flexibility to be able to respond to changing circumstances. For lubricants, certain products continue to experience product-specific constraints, and this is true to the nature of the different supply chains of some of our products and the manufacturing footprint relating to those products. We are actively managing these constraints, prioritizing our customer requirements, and we continue to leverage Shell's global network to also minimize disruptions and maintain continuity of our customers.

Speaker #4: That being said, the underlying geopolitical risks have not disappeared, and market conditions can still change rapidly. Our focus remains on ensuring supply continuity and maintaining the flexibility to be able to respond to changing circumstances.

Speaker #4: For lubricants, certain products continue to experience product-specific constraints, and this is due to the nature of the different supply chains of some of our products and the manufacturing footprint relating to those products.

Speaker #4: So, we are actively managing these constraints, prioritizing customer requirements, and we continue to leverage Shell's global network to also minimize disruptions and maintain continuity where possible.

Speaker #3: Thank you. As supply conditions evolve, another major issue during the quarter was the impact of elevated fuel prices. I have a question specifically about the financial impact of those interventions.

Joan Co: Thank you. As supply conditions evolve, another major issue during the quarter was the impact of elevated fuel prices. I have a question here specifically on the financial impact of those interventions. I think, Rey, this one's for you. What impact did the government's fuel price interventions have on your margins?

Jhonna Cañeja: Thank you. As supply conditions evolve, another major issue during the quarter was the impact of elevated fuel prices. I have a question here specifically on the financial impact of those interventions. I think, Rey, this one's for you. What impact did the government's fuel price interventions have on your margins?

Speaker #3: I think, Michael, this one's for you. So, what impact did the government's fuel price interventions have on your margins?

Speaker #1: Thank you. Maybe let me start by saying that we really fully support the government’s objective of protecting consumers, especially during this period of very exceptional fuel price volatility.

Rey Abilo: Thank you. Maybe let me start by saying that we really fully support the government's objective of protecting our consumers, especially during these periods of very exceptional fuel price volatility. We continue to work closely with the Department of Energy and other agencies. We actually contributed significantly to the Public Utility Vehicle, or PUV, fuel discount program, with Shell sites accounting to at least 50% of all those participating sites nationwide. We also complied with the limits on weekly price movements intended to help cushion the impact on consumers. Now, having said that, from a business perspective, however, because of the volatility in the market, rapidly rising international product costs, combined with constraints on the timing and the extent of local price adjustments, created a lack in cost recovery, which actually contributed to margin compression.

Michael Ramolete: Thank you. Maybe let me start by saying that we really fully support the government's objective of protecting our consumers, especially during these periods of very exceptional fuel price volatility. We continue to work closely with the Department of Energy and other agencies. We actually contributed significantly to the Public Utility Vehicle, or PUV, fuel discount program, with Shell sites accounting to at least 50% of all those participating sites nationwide. We also complied with the limits on weekly price movements intended to help cushion the impact on consumers. Now, having said that, from a business perspective, however, because of the volatility in the market, rapidly rising international product costs, combined with constraints on the timing and the extent of local price adjustments, created a lack in cost recovery, which actually contributed to margin compression.

Speaker #1: And we continue to work closely with the Department of Energy and other agencies. We actually contributed significantly to the Public Utility Vehicle, or PUV, fuel discount program, which Shell cites as accounting for at least 50% of all participating sites nationwide.

Speaker #1: We also complied with the limits on weekly price movements, intended to help cushion the impact on consumers. Now, having said that, from a business perspective, however, because of the volatility in the market, rapidly rising international product costs combined with the constraints on the timing and the extent of local price adjustments created a lag in cost recovery and contributed to which actually contributed to margin compression.

Speaker #1: We continue to engage constructively with the government and industry stakeholders on the pricing mechanism, with the objective of balancing consumer protection with sufficient pricing flexibility for the industry to recover legitimate cost movements and remain financially sustainable.

Michael Ramolete: We do continue to engage constructively with the government, and industry stakeholders on the pricing mechanism with the objective of balancing consumer protection with sufficient pricing flexibility for the industry to recover the legitimate cost movements and remain financially sustainable. We will continue to balance customer affordability, requirements of the regulations, competitive positioning, and sustainable returns for the business.

Speaker #1: We will continue to balance customer affordability, regulatory requirements, competitive positioning, and sustainable returns for the business.

Speaker #3: Thank you, Michael. Let me move to a question on commercial fuels and lubricants. The question is, how were commercial fuels and lubricants able to recover so strongly after the volume decline they experienced?

Joan Co: Thank you, Rey. Let me move to a question on commercial fuels and lubricants. The question is, how were commercial fuels and lubricants able to recover so strongly after the volume decline in Q2? Jackie, may we ask you to take this one?

Jhonna Cañeja: Thank you, Rey. Let me move to a question on commercial fuels and lubricants. The question is, how were commercial fuels and lubricants able to recover so strongly after the volume decline in Q2? Jackie, may we ask you to take this one?

Speaker #3: Jackie, may we ask you to take this one?

Speaker #4: Thanks, Jonah. The commercial teams demonstrated resilience during this crisis, and it was in the strength of customer relationships that recovery became effective. So for both commercial businesses, we leveraged our long-standing relationships with key accounts, while strengthening contract execution, and we continued to win new customers.

Jacqueline Famorca: Thanks, Jona. The commercial teams demonstrated resilience during this crisis, and it was in the strength of customer relationships that recovery became effective. For both commercial businesses, we leveraged on our long-standing relationships with key accounts while strengthening contract execution, and we continued to win new customers. For commercial fuels, it was the power sector demand that remained strong. Reseller channels also expanded, and we continued to retain key accounts. During this period of tighter supply, reliability also became an important differentiator. Some customers turned to Shell because we were able to maintain supply when availability elsewhere in the market was constrained. For lubricants, we continued to serve key sectors such as power and transport while defending our position in the consumer goods sector and pursuing new customer opportunities.

Jackie Famorca: Thanks, Jona. The commercial teams demonstrated resilience during this crisis, and it was in the strength of customer relationships that recovery became effective. For both commercial businesses, we leveraged on our long-standing relationships with key accounts while strengthening contract execution, and we continued to win new customers. For commercial fuels, it was the power sector demand that remained strong.

Speaker #4: So, for commercial fuels, it was the power sector demand that remained strong. Reseller channels also expanded, and we continued to retain key accounts. During this period of tighter supply, reliability also became an important differentiator.

Jackie Famorca: Reseller channels also expanded, and we continued to retain key accounts. During this period of tighter supply, reliability also became an important differentiator. Some customers turned to Shell because we were able to maintain supply when availability elsewhere in the market was constrained. For lubricants, we continued to serve key sectors such as power and transport while defending our position in the consumer goods sector and pursuing new customer opportunities. Our priority right now is sustainable recovery, and we continue to have a strong brand equity supported by supply reliability, strong customer relationships, and disciplined commercial execution. Back to you, Jonah.

Speaker #4: Some customers turned to Shell because we were able to maintain supply when availability elsewhere in the market was constrained. Now, for lubricants, we continued to serve key sectors such as power and transport, while defending our position in the consumer road sector and pursuing new customer opportunities.

Speaker #4: Our priority right now is sustainable recovery, and we continue to have strong brand equity, supported by supply reliability, strong customer relationships, and disciplined commercial execution.

Jacqueline Famorca: Our priority right now is sustainable recovery, and we continue to have a strong brand equity supported by supply reliability, strong customer relationships, and disciplined commercial execution. Back to you, Jonah.

Speaker #4: Back to you, Jonah.

Speaker #3: Thank you, Jackie. So, there is another lubricants question here. I think you can take this one as well. Jackie, besides Shell mechanical leak and Rimula Caravan, what other initiatives supported lubricants volume growth?

Joan Co: Thank you, Jackie. There is another lubricants question here. I think you can take this one as well, Jackie. Besides Shell Mekaniko League and Rimula Caravan, what other initiatives supported lubricants volume growth?

Jhonna Cañeja: Thank you, Jackie. There is another lubricants question here. I think you can take this one as well, Jackie. Besides Shell Mekaniko League and Rimula Caravan, what other initiatives supported lubricants volume growth?

Speaker #4: All right. So, for volume growth in commercial lubricants, it was supported by a combination of stronger go-to-market execution and also channel expansion. What this means is that we continue to expand partnerships with independent auto and motorcycle workshops, and we are also consciously growing our Shell Helix flagship auto workshop network.

Jacqueline Famorca: All right. For volume growth for commercial lubricants, it was supported by a combination of a stronger route to market execution and also channel expansion. What this means is that we continue to expand partnerships with independent auto and motorcycle workshops, and we also are consciously growing our Shell Helix flagship auto workshop network. These channels help sustain our market position in consumer road sector by increasing product availability and accessibility to consumers. At the same time, the programs that you mentioned, the Shell Mekaniko League and Rimula Caravan, also strengthened engagement with mechanics, drivers, and communities in the transport sector through technical capability building as we partnered with TESDA, which also helped their livelihood. These initiatives help us reach more customers, increase product recommendation and usage, and also supported our sustainable volume growth.

Jackie Famorca: All right. For volume growth for commercial lubricants, it was supported by a combination of a stronger route to market execution and also channel expansion. What this means is that we continue to expand partnerships with independent auto and motorcycle workshops, and we also are consciously growing our Shell Helix flagship auto workshop network. These channels help sustain our market position in consumer road sector by increasing product availability and accessibility to consumers. At the same time, the programs that you mentioned, the Shell Mekaniko League and Rimula Caravan, also strengthened engagement with mechanics, drivers, and communities in the transport sector through technical capability building as we partnered with TESDA, which also helped their livelihood. These initiatives help us reach more customers, increase product recommendation and usage, and also supported our sustainable volume growth.

Speaker #4: Now, these channels help sustain our market position in the consumer road sector by increasing product availability and accessibility to consumers. At the same time, the programs that you mentioned—the Shell Mechanical League and Rimula Caravan—also strengthened engagement with mechanics, drivers, and communities in the transport sector.

Speaker #4: Through technical capability building as we partnered with Tesla, which also helped their livelihood. Now, these initiatives helped us reach more customers, increase product recommendation and usage, and also supported our sustainable volume growth.

Joan Co: Okay. Thank you, Jackie. Let me now move to one of the questions we consistently receive from shareholders here, which is around dividends. Rey, this question goes to you: Are you still planning to pay a second dividend within 2026?

Jhonna Cañeja: Okay. Thank you, Jackie. Let me now move to one of the questions we consistently receive from shareholders here, which is around dividends. Rey, this question goes to you: Are you still planning to pay a second dividend within 2026?

Speaker #3: Okay. Thank you, Jackie. Let me now move to one of the questions we consistently receive from shareholders here, which is around dividends. Really, this question goes to you.

Speaker #3: Are you still planning to pay a second dividend within 2026?

Speaker #1: Yes, thank you very much, Jonah. Perhaps let me start by reiterating our commitment to building a sustainable dividend track record, as well as providing an attractive return to our shareholders.

Rey Abilo: Yes. Thank you very much, Jonah. Perhaps let me start by reiterating our commitment in terms of building a sustainable dividend track record, as well as providing an attractive return to our shareholders. If we look at our key considerations in terms of declaring dividends, those are, number one, free cash flow, number two, gearing and earnings level, and number three is the available retained earnings for dividend distribution. If you look at our H1 performance, our free cash flow remains positive and the gearing is within the target range that we have set upon ourselves. However, if we look at our earnings performance, we ended the H1 with a net loss of PHP 2.7 billion and our retained earnings available for dividend distribution is on a deficit of PHP 900 million.

Speaker #1: And if we look at our key considerations in terms of declaring dividends, those are: number one, free cash flow; number two, gearing; and number three, earnings level.

Speaker #1: And number three is the available retained earnings for dividend distribution. If you look at our first half performance, our free cash flow remains positive.

Speaker #1: And the gearing is within the target range that we have set upon ourselves. However, if we look at our earnings performance, we ended the first half with a net loss of ₱2.7 billion, and our retained earnings available for dividend distribution is at a deficit of ₱900 million.

Speaker #1: Hence, the decision for the second tranche of dividend this year will be decided or will be made by the board in the November meeting, when we expect to have better visibility of our earnings performance, of our cash generation, our balance sheet capacity, and of course, the overall external environment.

Rey Abilo: Hence, the decision for the second tranche of dividend this year will be decided or will be made by the board in the November meeting when we expect to have better visibility of our earnings performance, of our cash generation, our balance sheet capacity, and of course, the overall external environment. Having said that, our long-term dividend strategy has not changed, and it remains to be ensuring that our dividend distribution is supported by sustainable earnings by our financial capacity and also of all applicable regulatory requirements.

Speaker #1: Having said that, our long-term dividend strategy has not changed. And it remains to be ensuring that our dividend distribution is supported by sustainable earnings, by our financial capacity, and also of all applicable regulatory requirements.

Speaker #3: Thank you, Ray. Related to shareholder returns, there's also a question here on whether we should look at the recent market performance. So the question is: How should investors view Shell's recent share price performance, particularly given the broader Philippine market environment?

Joan Co: Thank you, Rey. Related to shareholder returns, there is also a question here on should look at the recent market performance. The question is: How should investors view Shell's recent share price performance, particularly given the broader Philippine market environment? I think, Darlyn, maybe Rey could take this one.

Jhonna Cañeja: Thank you, Rey. Related to shareholder returns, there is also a question here on should look at the recent market performance. The question is: How should investors view Shell's recent share price performance, particularly given the broader Philippine market environment? I think, Darlyn, maybe Rey could take this one.

Speaker #3: Do you think, Larry, may we ask you to take this one?

Speaker #4: Yeah, I guess I'll tackle the broader Philippine market environment first. So, the Philippine equity market also experienced significant volatility during the second quarter. I mean, yeah, the geopolitical tensions in the Middle East weakened, you could say, investor appetite and raised concerns around oil prices, inflation, and the domestic economic outlook.

Lorelie Quiambao-Osial: Well, I guess I will tackle the broader Philippine market environment first. The Philippine equity market also experienced significant volatility during Q2. I mean, geopolitical tensions in the Middle East weakened, you could say, investor appetite and raised concerns around oil prices, around inflation, and the domestic economic outlook. The PSE index fell below the 6,000 level in June before subsequently recovering as some of the concerns eased. Against that backdrop, we recognize that share price movements will also be influenced by broader market conditions. These are outside our control. Therefore, for us, what we focus on are the things that we can control, which is performance. Our priority is to restore earnings to sustain cash generation and maintain a resilient balance sheet and deliver against our commitments.

Lorelie Quiambao Osial: Well, I guess I will tackle the broader Philippine market environment first. The Philippine equity market also experienced significant volatility during Q2. I mean, geopolitical tensions in the Middle East weakened, you could say, investor appetite and raised concerns around oil prices, around inflation, and the domestic economic outlook. The PSE index fell below the 6,000 level in June before subsequently recovering as some of the concerns eased.

Speaker #4: So, the PSE index fell below the 6,000 level in June, before subsequently recovering as some of the concerns eased. Now, against that backdrop, we recognize that share price movements will also be influenced by broader market conditions.

Lorelie Quiambao Osial: Against that backdrop, we recognize that share price movements will also be influenced by broader market conditions. These are outside our control. Therefore, for us, what we focus on are the things that we can control, which is performance. Our priority is to restore earnings to sustain cash generation and maintain a resilient balance sheet and deliver against our commitments. As we build stronger track record of execution and shareholder returns, we believe that this should strengthen investor confidence and allow the market to appropriately reflect underlying value of Shell.

Speaker #4: And these are outside our control. So therefore, for us, what we focus on are the things that we can control, which is performance. So our priority is to restore earnings, to sustain cash generation, and maintain a resilient balance sheet.

Speaker #4: And deliver against our commitments. So, as we build a stronger track record of execution and shareholder returns, we believe that this should strengthen investor confidence and allow the market to appropriately reflect underlying value for shareholders.

Lorelie Quiambao-Osial: As we build stronger track record of execution and shareholder returns, we believe that this should strengthen investor confidence and allow the market to appropriately reflect underlying value of Shell.

Speaker #3: Thank you, Larry. Let me move to some of the more technical financial questions coming through on this. The first is on inventory holding losses.

Joan Co: Thank you, Darlyn. Let me move to some of the more technical financial questions coming through on Menti. The first is on inventory holding losses. The question is: Why did you record an inventory holding loss despite the sharp increase in oil prices earlier in the second part? Rey, maybe bring that to you.

Jhonna Cañeja: Thank you, Darlyn. Let me move to some of the more technical financial questions coming through on Menti. The first is on inventory holding losses. The question is: Why did you record an inventory holding loss despite the sharp increase in oil prices earlier in the second part? Rey, maybe bring that to you.

Speaker #3: The question is: why did you record an inventory holding loss, despite the sharp increase in oil prices earlier in the second quarter? Rainy, we bring that to you.

Speaker #1: Yeah. Thank you, Jonah. And indeed, oil prices rose sharply—I think starting March and going into April. That's one of the reasons why, if we look at the Q1 results, we actually reported a 2 billion pesos inventory holding gain.

Rey Abilo: Thank you, Jonah. Oil prices rose sharply, starting March going into April. That is one of the reasons why, if we look at the Q1 results, we actually reported a PHP 2 billion of inventory holding gain. However, that subsequently eased during Q2. In Q2, we have reported a PHP 3 billion of inventory holding loss. Therefore, if we combine both the results of Q1 and Q2 for the H1 performance overall, we are showing a PHP 1 billion of inventory holding loss. Why is it like that? If we will recall, we purchased inventory ahead of when it is sold. Therefore, there is an inherent timing effect between the carrying costs of the inventory and the prevailing market or replacement price.

Speaker #1: However, that subsequently eased during quarter two. And in quarter two, we have reported a $3 billion inventory holding loss. Therefore, if we combine the results of Q1 and Q2 for the first half performance overall, we are showing a $1 billion inventory holding loss.

Speaker #1: Now, why is it like that? We will recall that we purchase inventory ahead of when it is sold, and therefore there is an inherent timing effect between the carrying cost of the inventory and the prevailing market or replacement price.

Speaker #1: Therefore, what happened in Q2, more specifically, is inventories were acquired at a higher cost at the peak of elevating prices, and then later sold to the market at a lower price, resulting in inventory holding losses.

Rey Abilo: Therefore, what happened in Q2, more specifically, is inventories were acquired at a higher cost at the peak of elevating prices and then later sold to the market at a lower price, resulting in inventory holding losses. We have to bear in mind that inventory holding losses and gains reflect primarily the volatility of commodity price movements rather than the underlying business performance. Therefore, that is the reason why we show core earnings separately without the impact of inventory holding losses and gains. Having said that, let me also reiterate that we have not changed our valuation or accounting for inventory. It remains to be on a FIFO basis, and it uses the lower of cost or net realizable value.

Speaker #1: Now, we have to bear in mind that inventory holding losses and gains reflect primarily the volatility of commodity price movements, rather than the underlying business performance.

Speaker #1: And therefore, that's the reason why we show core earnings separately, without the impact of inventory holding losses and gains. Having said that, let me also reiterate that we have not changed our valuation or accounting for inventory.

Speaker #1: It remains to be on a FIFO basis, and it uses the lower of cost or net realizable value.

Joan Co: Wow, okay. Thank you, Rey. There is also a question here on another source of volatility during the period, the movement in Forex. What was the impact of Forex movements during the period, and how did your hedging program mitigate this? Rey, a follow-up for you.

Jhonna Cañeja: Wow, okay. Thank you, Rey. There is also a question here on another source of volatility during the period, the movement in Forex. What was the impact of Forex movements during the period, and how did your hedging program mitigate this? Rey, a follow-up for you.

Speaker #3: Wow. Okay, thank you, Ray. There is also a question here on another source of volatility during the period: the movement in forex. So, what was the impact of forex movements during the period?

Speaker #3: And how did your hedging program mitigate this? Ray, a follow-up for you.

Speaker #1: Yeah. Indeed, we have unfortunately seen depreciation of the peso amidst the kind of macro environment that we are experiencing at the moment. And for the first half of the year, we have reported a total FX loss of about 128 million pesos.

Rey Abilo: Indeed, we have seen, unfortunately, depreciation of peso amidst the kind of macro environment that we are experiencing at the moment. For the H1 of the year, we have reported a total FX loss of about PHP 128 million. This already includes both the realized and unrealized portion as of H1 of the year. However, having said that PHP 128 million is already net of the hedging gain that we have started to execute of about PHP 216 million. This means the net foreign exchange loss could have been higher had not for the hedging actions that we have done for the company. This demonstrates the role of our risk management framework in moderating currency exposure and protecting the business from larger swings in terms of Forex movements.

Speaker #1: And this already includes both the realized and unrealized portion, as of the first half of the year. However, having said that, that ₱128 million is already net of the hedging gain that we have started to execute, of about ₱216 million.

Speaker #1: So, which means the net foreign exchange loss could have been higher had it not been for the hedging actions that we have done for the company.

Speaker #1: So, this demonstrates the role of our risk management framework in moderating currency exposure and protecting the business from larger swings in terms of forex movements.

Speaker #3: Thank you, Ray. Let me shift back to the commercial outage. We have a question here on where management sees the strongest areas of opportunity moving into the second half.

Joan Co: Thank you, Rey. Let me shift back to the commercial output. We have a question here on where management sees the strongest areas of opportunity moving into the H2. I think, Jackie, this one's for you. On the commercial side, which sectors do you see providing the strongest opportunities in the H2 of 2026 and into 2027?

Jhonna Cañeja: Thank you, Rey. Let me shift back to the commercial output. We have a question here on where management sees the strongest areas of opportunity moving into the H2. I think, Jackie, this one's for you. On the commercial side, which sectors do you see providing the strongest opportunities in the H2 of 2026 and into 2027?

Speaker #3: I think, Jackie, this one's for you on the commercial side. Which sectors do you see providing the strongest opportunities in the second half of 2026 and into 2027?

Jacqueline Famorca: The power sector remains to be one of our strongest areas of opportunity because of the energy demand, while reseller channels are also showing good momentum. Beyond these, we also see opportunities in mining, transport, and manufacturing, where our supply reliability, customer relationship, and technical capabilities allow us to differentiate and continue winning business. Nevertheless, we will remain selective in pursuing these opportunities because our focus is on profitable growth, prioritizing customers and key sectors where we can generate appropriate margins, cash, and returns.

Jackie Famorca: The power sector remains to be one of our strongest areas of opportunity because of the energy demand, while reseller channels are also showing good momentum. Beyond these, we also see opportunities in mining, transport, and manufacturing, where our supply reliability, customer relationship, and technical capabilities allow us to differentiate and continue winning business. Nevertheless, we will remain selective in pursuing these opportunities because our focus is on profitable growth, prioritizing customers and key sectors where we can generate appropriate margins, cash, and returns.

Speaker #4: The power sector remains one of our strongest areas of opportunity because of the energy demand, while reseller channels are also showing good momentum.

Speaker #4: Now, beyond these, we also see opportunities in mining, transport, and manufacturing, where our supply reliability, customer relationships, and technical capabilities allow us to differentiate and continue winning business.

Speaker #4: Nevertheless, we will remain selective in pursuing these opportunities because our focus is on profitable growth, prioritizing customers and key sectors where we can generate appropriate margins, cash, and returns.

Speaker #3: Thank you, Jackie. There is also a related question on how we are pursuing growth while still maintaining capital discipline, particularly in lubricants. So, Jackie, this was a follow-up for you.

Joan Co: Thank you, Jackie. There is also related questions on how we are pursuing growth while still maintaining capital discipline, particularly in lubricants. Jackie, this one's a follow-up for you. Why are you continuing to expand flagship workshops when the company is maintaining tight capital discipline?

Jhonna Cañeja: Thank you, Jackie. There is also related questions on how we are pursuing growth while still maintaining capital discipline, particularly in lubricants. Jackie, this one's a follow-up for you. Why are you continuing to expand flagship workshops when the company is maintaining tight capital discipline?

Speaker #3: Why are you continuing to expand flagship workshops when the company is maintaining tight capital discipline?

Jacqueline Famorca: The flagship workshop expansion is designed to be capital efficient and partnership-led. We currently have around 17 year to date, and we are still targeting approximately 13 additional locations at the balance of the year. This investment is also shared with our partners, allowing us to expand our reach without requiring a significant increase in Shell capital. This partnership also extends our presence beyond mobility sites and give us access to regional and nationwide workshop networks, supporting lubricants volume growth and customer reach. This is still consistent with our capital discipline. We are pursuing growth through a relatively capital-light model that leverages on partnership while preserving financial flexibility. Back to you, Jonah.

Jackie Famorca: The flagship workshop expansion is designed to be capital efficient and partnership-led. We currently have around 17 year to date, and we are still targeting approximately 13 additional locations at the balance of the year. This investment is also shared with our partners, allowing us to expand our reach without requiring a significant increase in Shell capital. This partnership also extends our presence beyond mobility sites and give us access to regional and nationwide workshop networks, supporting lubricants volume growth and customer reach. This is still consistent with our capital discipline. We are pursuing growth through a relatively capital-light model that leverages on partnership while preserving financial flexibility. Back to you, Jonah.

Speaker #4: The flagship workshop expansion is designed to be capital efficient and partnership-led. We currently have around 17 year-to-date, and we are still targeting approximately 13 additional locations for the balance of the year.

Speaker #4: Now, this investment is also shared with our partners, allowing us to expand our reach without requiring a significant increase in Shell capital. Now, these partnerships also extend our presence beyond mobility sites and give us access to regional and nationwide workshop networks.

Speaker #4: Supporting lubricants volume growth and customer reach. This is still consistent with our capital discipline. We are pursuing growth through a relatively capitalized model that leverages partnerships while preserving financial flexibility.

Speaker #4: Back to you, Jonah.

Speaker #3: Thank you, Jackie. Staying with customer growth, there is also a question here on Fleet Solutions. So, what supported Fleet Solutions' resilience and customer wins during the period?

Joan Co: Thank you, Jackie. Staying with customer growth, there is also a question here on fleet solutions. What supported fleet solutions resilience and customer wins during the period? Miker, this one is for you.

Jhonna Cañeja: Thank you, Jackie. Staying with customer growth, there is also a question here on fleet solutions. What supported fleet solutions resilience and customer wins during the period? Miker, this one is for you.

Speaker #3: Micah, this one's for you.

Speaker #1: Okay. Thank you, Jonah. For Fleet Solutions, the key differentiator was really reliable supply, especially during this period. So we continued to support our home-based customers and their operational requirements despite a volatile and very competitive market.

Michael Ramolete: Okay. Thank you, Jonah. For fleet solutions, the key differentiator was really reliable supply, especially during this period. We continue to support our home-based customers and their operational requirements despite a volatile and very competitive market, while also winning new accounts. Our nationwide network, our fleet management proposition, and our ability to maintain supply continuity strengthen the value that we offer beyond simply providing fuel. We will continue to focus on customer retention and acquisition, reliable service, and profitable growth while maintaining discipline on pricing, contract terms, and company returns. Back to you, Jonah.

Speaker #1: While also winning new accounts, our nationwide network, our fleet management proposition, and our ability to maintain supply continuity strengthened the value that we offer beyond simply providing fuel.

Speaker #1: So we will continue to focus on customer retention and acquisition, reliable service, and profitable growth, while maintaining discipline on pricing, contractor terms, and company returns.

Speaker #1: Back to you, Jonah.

Speaker #3: Thank you, Micah. Let me move from customer growth to supply infrastructure, because we have a question here on the import terminal. So, is the fifth import terminal still on track for 2026?

Joan Co: Thank you, Miker. Let me move from customer growth to supply infrastructure because we have a question here on the import terminal. Is the fifth import terminal still on track for 2026, and how does it fit within Shell Pilipinas' disciplined capital allocation strategy? Rey, maybe I should take this one. Sorry, I take this one for Lorelie.

Jhonna Cañeja: Thank you, Miker. Let me move from customer growth to supply infrastructure because we have a question here on the import terminal. Is the fifth import terminal still on track for 2026, and how does it fit within Shell Pilipinas' disciplined capital allocation strategy? Rey, maybe I should take this one. Sorry, I take this one for Lorelie.

Speaker #3: And how does it fit within Shell Pilipinas' disciplined capital allocation strategy? Ray, may we ask you to take this one? Sorry, I'll take this one for Lauren.

Speaker #4: Yes, so our fifth import terminal is on track for completion by the end of 2026. Now, this is a strategic investment for SPC, and it intends to ensure and strengthen our supply resilience. It will improve our ability to position products closer to our customers, and it will enhance our competitiveness in the desired region over the long term.

Lorelie Quiambao-Osial: Yes. Our fifth import terminal is on track for completion by end 2026. This is a strategic investment for SPC, and it intends to ensure and strengthen our supply resilience. It will improve our ability to position products closer to our customers, and it will enhance our competitiveness in the Visayas region over the long term. The project is consistent with our disciplined approach to capital allocation, particularly at the current time. We remain highly selective when it comes to our investments, and we prioritize projects that strengthen resilience of the business, improve long-term competitive positioning, and also support sustainable shareholder value creation. The Visayas terminal meets those criteria. It is enhancing supply flexibility and supporting future growth opportunities in a very important market.

Lorelie Quiambao Osial: Yes. Our fifth import terminal is on track for completion by end 2026. This is a strategic investment for SPC, and it intends to ensure and strengthen our supply resilience. It will improve our ability to position products closer to our customers, and it will enhance our competitiveness in the Visayas region over the long term. The project is consistent with our disciplined approach to capital allocation, particularly at the current time. We remain highly selective when it comes to our investments, and we prioritize projects that strengthen resilience of the business, improve long-term competitive positioning, and also support sustainable shareholder value creation. The Visayas terminal meets those criteria. It is enhancing supply flexibility and supporting future growth opportunities in a very important market.

Speaker #4: The project is consistent with our disciplined approach to capital allocation. Particularly at the current time, we remain highly selective when it comes to our investments, and we prioritize projects that strengthen the resilience of the business, improve long-term competitive positioning, and also support sustainable shareholder value creation.

Speaker #4: Now, the designed terminal meets those criteria. It is enhancing supply flexibility and supporting future growth opportunities in a very important market.

Speaker #3: Thank you, Lauren. There is a question here about how the company managed OPEX during such a challenging period. So, how did you manage costs during the period, despite the challenging operating environment?

Joan Co: Thank you, Lorelie. There is a question here on how the company managed OPEX during such a challenging period. How did you manage costs during the period despite the challenging operating environment? Rey, over to you.

Jhonna Cañeja: Thank you, Lorelie. There is a question here on how the company managed OPEX during such a challenging period. How did you manage costs during the period despite the challenging operating environment? Rey, over to you.

Speaker #3: Ray over to you.

Speaker #1: Yeah, indeed, cost discipline is very important, particularly as we navigate a very challenging business environment. And I'm pleased to share that we have sustained that strong cost discipline throughout the first half of 2026.

Rey Abilo: Yeah. Indeed, cost discipline is very important, particularly as we navigate a very challenging business environment. I am pleased to share that we have sustained that strong cost discipline throughout the H1 2026. If you look at the discretionary and the controllable expenses, it is actually lower compared to the same period last year, particularly if we look at marketing, communications, and utilities, where we carefully manage spending and preserve cash, which really helped the company for the H1. This was partly offset by some one-off items in repairs and maintenance, which are necessary to support safe, reliable operations and also to ensure the long-term resilience of business operations. Our objective is not simply to reduce costs, but to maintain it structurally efficient while continuing to invest in safety, in reliability, in capabilities that support our future goals.

Speaker #1: If you look at this questionnaire and the controllable expenses, they're actually lower compared to the same period last year, particularly if we look at marketing, communications, and utilities, where we carefully manage spending and preserve cash. This really helped the company for the first half.

Speaker #1: Now, this was partly offset by some one-off items in repairs and maintenance, which are necessary to support safe, reliable operations and also to make sure or to ensure, rather, the long-term resilience of business operations.

Speaker #1: Our objective is not simply to reduce costs, but to maintain it structurally efficient while continuing to invest in safety, in reliability, and in capabilities that support our future goal.

Joan Co: Thank you, Rey. That naturally brings us back to cash generation. I am seeing here a question related to FCF. Free cash flow remained positive at PHP 2.4 billion despite the large net loss. What were the main working capital drivers, and how sustainable is this FCF level if oil prices stay elevated? I think, Rey, staying with you.

Jhonna Cañeja: Thank you, Rey. That naturally brings us back to cash generation. I am seeing here a question related to FCF. Free cash flow remained positive at PHP 2.4 billion despite the large net loss. What were the main working capital drivers, and how sustainable is this FCF level if oil prices stay elevated? I think, Rey, staying with you.

Speaker #3: Thank you, Ray. That naturally brings us back to cash generation. I'm seeing here a question related to FCF. Free cash flow remained positive at $2.4 billion, despite the large net loss.

Speaker #3: What were the main working capital drivers, and how sustainable is this FCS level if oil prices stay elevated? I think, Ray, staying with you.

Speaker #1: Yeah, sure. Positive free cash flow indeed remains to be a key priority for the company under our cash returns and growth strategic framework. And we indeed generated 2.4 billion pesos of free cash flow for the first half of the year despite the difficult operating environment.

Rey Abilo: Yeah, sure. Positive free cash flow indeed remains to be a key priority for the company under our cash returns and growth strategic framework. We indeed generated PHP 2.4 billion of free cash flow for the H1 of the year, despite the difficult operating environment. This is supported by disciplined working capital management, prudent spending, and stronger financial footing built entering the year for 2026. If we look at the H1 performance, a big chunk of that as well is to the credit of the PHP 4 billion tax recoveries that we have realized in Q1 of this year. Of course, another key factor there would be the discipline that we have implemented in terms of managing our inventory levels.

Speaker #1: And this is supported by disciplined working capital management, prudent spending, and a stronger financial footing built entering the year for 2026. If we look at the first half performance, a big chunk of that as well is to the credit of the ₱4 billion tax recoveries that we have realized in Q1 of this year.

Speaker #1: Of course, another key factor there would be the discipline that we have implemented in terms of managing our inventory levels. So, despite the swings that we have seen for the first half of the year, we managed to maintain the same inventory level, ending 2025 up to June end of 2026.

Rey Abilo: Despite the swings that we have seen for the H1 of the year, we managed to maintain the same inventory level ending 2025 up to June end of 2026. Having said that, working capital will continue to be an important factor in generating cash, and therefore the discipline and the focus will remain. But sustainable free cash flow over the longer term must ultimately be underpinned by stronger earnings. Therefore, management focus is to restore profitability. That is very important, particularly in the next six months of the year, as well as improving cash conversion for the company. I think it is very important to highlight as well that capital spending will remain disciplined and selected on the basis of credibility and competitiveness. Thank you.

Speaker #1: Now, having said that, working capital will continue to be an important factor in generating cash, and therefore the discipline and the focus will remain.

Speaker #1: But sustainable free cash flow over the longer term must ultimately be underpinned by stronger earnings. Therefore, management's focus is to restore profitability—which is very important, particularly in the next six months of the year—as well as to improve cash conversion for the company.

Speaker #1: And I think it's very important to highlight as well that capital spending will remain disciplined and selective, on the basis of credibility and competitiveness.

Speaker #1: Thank you.

Speaker #3: Thank you, Ray. Let me now pick up a question on the crude inventory transaction discussed earlier in the presentation. So Lauren, what was the rationale for the sale of the remaining crude inventory, and how should we view its contribution to earnings?

Joan Co: Thank you, Rey. Let me now pick up a question on the crude inventory transaction discussed earlier in the presentation. Lorlie, what was the rationale for the sale of the remaining crude inventory, and how should investors view its contribution to earnings?

Jhonna Cañeja: Thank you, Rey. Let me now pick up a question on the crude inventory transaction discussed earlier in the presentation. Lorlie, what was the rationale for the sale of the remaining crude inventory, and how should investors view its contribution to earnings?

Speaker #4: So the crude inventory and the associated materials were from our former refinery. So this was the crude disposal, and it was from that period.

Lorelie Quiambao-Osial: The crude inventory and the associated materials were from our former refinery. This was a crude disposal and also it was from that period, and it has been held pending disposal since then. The supply disruption arising from the Middle East conflict created an opportunity to monetize this inventory in a way that both realized value for the company, at the same time also helped address a market requirement. We therefore took the opportunity to complete the sale under favorable market conditions. The transaction was safely executed which was really good, and also generated a one-off gain, unlocking value from a legacy asset. This is not part of our ongoing

Lorelie Quiambao Osial: The crude inventory and the associated materials were from our former refinery. This was a crude disposal and also it was from that period, and it has been held pending disposal since then. The supply disruption arising from the Middle East conflict created an opportunity to monetize this inventory in a way that both realized value for the company, at the same time also helped address a market requirement. We therefore took the opportunity to complete the sale under favorable market conditions. The transaction was safely executed which was really good, and also generated a one-off gain, unlocking value from a legacy asset. This is not part of our ongoing

Speaker #4: And it has been held pending disposal since then. Now, the supply disruption arising from the Middle East conflict created an opportunity to monetize this inventory in a way that both realized value for the company, but at the same time also helped address a market requirement.

Speaker #4: So we therefore took the opportunity to complete the sale under favorable market conditions. Now, the transaction was safely executed, which is really good.

Speaker #4: We also generated a one-off gain, unlocking value from a legacy asset that was not part of our ongoing ventures.

Joan Co: Yes. Thank you, Lorlie. There is also a question here comparing our financial performance with another player in the industry. The question is: In a sustained higher oil price environment, does the pure marketing model create more earnings volatility than peers with refining exposure? Could its refinery have made the difference? How do you manage this, Lorlie Lee?

Jhonna Cañeja: Yes. Thank you, Lorlie. There is also a question here comparing our financial performance with another player in the industry. The question is: In a sustained higher oil price environment, does the pure marketing model create more earnings volatility than peers with refining exposure? Could its refinery have made the difference? How do you manage this, Lorlie Lee?

Speaker #3: Yes, thank you, Lauren. There's also a question here comparing our financial performance with another player in the industry. So the question is: In a sustained higher oil price environment, does the pure marketing model create more earnings volatility than peers with refining exposure?

Speaker #3: Could its refinery have made the difference, and how do you manage the risk? Lauren?

Speaker #4: A comparison between companies needs to be made very carefully. I mean, earnings—as you know—can be significantly influenced by multiple factors, and these can differ from company to company.

Lorelie Quiambao-Osial: Comparisons between companies need to be made very carefully. In earnings, as you know, if it is different companies, can also be significantly influenced by multiple factors. Differences in business models, portfolio mix, supply arrangements, inventory positions, and exposure to market movements, both of the raw materials, so feedstock, and the finished products. These factors can produce very different outcomes even while different companies will be operating within the same operating environment. For Shell Pilipinas, the PHP 2.7 billion net loss was largely driven by inventory holding mixes, margin compression, and exceptional market conditions experienced during the period. At the same time, the underlying businesses demonstrated resilience. In commercial fuels and lubricants delivered volume growth. Mobility showed improving momentum. We had fuel supply that remained uninterrupted. It was not just about having supply, but it was also having a model that gave us the supply flexibility through the disruption.

Lorelie Quiambao Osial: Comparisons between companies need to be made very carefully. In earnings, as you know, if it is different companies, can also be significantly influenced by multiple factors. Differences in business models, portfolio mix, supply arrangements, inventory positions, and exposure to market movements, both of the raw materials, so feedstock, and the finished products. These factors can produce very different outcomes even while different companies will be operating within the same operating environment. For Shell Pilipinas, the PHP 2.7 billion net loss was largely driven by inventory holding mixes, margin compression, and exceptional market conditions experienced during the period. At the same time, the underlying businesses demonstrated resilience. In commercial fuels and lubricants delivered volume growth. Mobility showed improving momentum. We had fuel supply that remained uninterrupted. It was not just about having supply, but it was also having a model that gave us the supply flexibility through the disruption.

Speaker #4: I mean, differences in business models, portfolio mix, supply arrangements, inventory positions, and exposure to market movements—both of the raw materials or feedstock, and the finished products.

Speaker #4: Now, these factors can produce very different outcomes even while different companies are operating within the same operating environment. Now, for Shell Pilipinas, the ₱2.7 billion net loss was largely driven by inventory holding losses, margin compression, and exceptional market conditions experienced during the period.

Speaker #4: But at the same time, the underlying businesses demonstrated resilience in commercial fuels and in lubricants, delivered volume growth, mobility showed improving momentum, we had fuel supply that remained uninterrupted. But it wasn't just about having supply; it was also about having a model that gave us flexibility—flexibility in supply through the disruption.

Speaker #4: And through that time, the company continued to generate positive free cash flow of $2.4 billion. Now, whether a refinery would have changed the circumstance, the outcome is difficult to determine, as profitability during this period was influenced by multiple factors.

Lorelie Quiambao-Osial: Through that time, the company continued to generate positive free cash flow of PHP 2.4 billion. Whether a refinery would have changed the circumstance, the outcome, is difficult to determine, as profitability during this period was influenced by multiple factors beyond just refining exposure. For SPC, our company, we do maintain a strong external perspective, and we regularly benchmark our performance against industry peers. That said, our strategic decisions and our strategy are guided primarily by what creates sustainable value for our shareholders and for the company. As market conditions normalize, and as mentioned by our CFO, our priority remains restoring profitability, improving, sustaining, and improving cash generation, and also converting the operational resilience demonstrated during the period into stronger financial performance for the rest of the year.

Lorelie Quiambao Osial: Through that time, the company continued to generate positive free cash flow of PHP 2.4 billion. Whether a refinery would have changed the circumstance, the outcome, is difficult to determine, as profitability during this period was influenced by multiple factors beyond just refining exposure. For SPC, our company, we do maintain a strong external perspective, and we regularly benchmark our performance against industry peers. That said, our strategic decisions and our strategy are guided primarily by what creates sustainable value for our shareholders and for the company. As market conditions normalize, and as mentioned by our CFO, our priority remains restoring profitability, improving, sustaining, and improving cash generation, and also converting the operational resilience demonstrated during the period into stronger financial performance for the rest of the year.

Speaker #4: Beyond just refining exposure—for FTC, our company—we do maintain a strong external perspective, and we regularly benchmark our performance against industry peers.

Speaker #4: That said, our strategic decisions and our strategy are guided primarily by what creates sustainable value for our shareholders and for the company.

Speaker #4: And as market conditions normalize, and as mentioned by our CFO, our priority remains restoring profitability, sustaining and improving cash generation, and also converting the operational resilience demonstrated during the period into stronger financial performance for the rest of the company.

Speaker #3: Thank you, Lauren. In terms of time, we will consolidate these two questions here. These are two related questions. So, first is: What is the single most important metric management watches internally that external investors should focus on instead of reported net income?

Joan Co: Thank you, Lorelie. In the interest of time, we will consolidate these two questions here. These are two related questions. First is, what is the single most important metric management watches internally that external investors should focus on instead of reported net income? The other one is, despite the H1 net loss and lagging peers, Petron and Top Line Business Development Corp. on reported earnings, what metrics does the board prioritize in assessing management performance beyond net income? Lorelie, I believe this question goes to you.

Jhonna Cañeja: Thank you, Lorelie. In the interest of time, we will consolidate these two questions here. These are two related questions. First is, what is the single most important metric management watches internally that external investors should focus on instead of reported net income? The other one is, despite the H1 net loss and lagging peers, Petron and Top Line Business Development Corp. on reported earnings, what metrics does the board prioritize in assessing management performance beyond net income? Lorelie, I believe this question goes to you.

Speaker #3: The other one is, despite the first-half net loss and lagging peers, Petron and Topline, on reported earnings, what metrics does the board prioritize in assessing management performance beyond net income?

Speaker #3: Lauren, I believe this question goes to you.

Speaker #4: While net income remains important, we also place significant emphasis on cash generation. Profitability, cash flow, and returns are all critical. Cash ultimately reflects the quality and the sustainability of earnings, and provides financial flexibility to invest, to grow, and to navigate through periods of uncertainty.

Lorelie Quiambao-Osial: While net income remains important, we also place significant emphasis on cash generation. Profitability, cash flow, and returns are all critical. Cash ultimately reflects the quality and the sustainability of earnings and provides financial flexibility to invest, to grow, and to navigate through periods of uncertainty.

Lorelie Quiambao Osial: While net income remains important, we also place significant emphasis on cash generation. Profitability, cash flow, and returns are all critical. Cash ultimately reflects the quality and the sustainability of earnings and provides financial flexibility to invest, to grow, and to navigate through periods of uncertainty.

Speaker #3: Okay, thank you for that. So we have covered earnings, cash, supply, and the recovery of the underlying businesses. Let me close the Q&A with a broader question for Lauren that brings this piece together.

Joan Co: Okay, thank you for that. We have covered earnings, cash, supply, and the recovery of the underlying businesses. Let me close the Q&A with a broader question for Lorelie that brings these themes together. Lorelie, as we look ahead from here, what is your outlook for Shell Pilipinas for H2 2023?

Jhonna Cañeja: Okay, thank you for that. We have covered earnings, cash, supply, and the recovery of the underlying businesses. Let me close the Q&A with a broader question for Lorelie that brings these themes together. Lorelie, as we look ahead from here, what is your outlook for Shell Pilipinas for H2 2023?

Speaker #3: So, Lauren, as we look ahead from here, what is your outlook for Shell Pilipinas for the second half of 2026?

Speaker #4: We entered the second half with improving momentum. Although the operating environment remains uncertain and is still subject to geopolitical, policy, and weather-related risks. While some of the pressures that affected the first half, including supply tightness and extreme price volatility, have eased for now, the market remains considerably fluid and still volatile.

Lorelie Quiambao-Osial: We enter H2 with improving momentum, although the operating environment remains uncertain and still subject to geopolitical policy and weather-related risks. While some of the pressures that affected H1, including supply tightness and extreme price volatility, have eased, I guess for now, the market remains considerably fluid and stable all the time. Against this backdrop, our priorities are clear. First, restore financial flexibility through disciplined cash, working capital, and capital management. The second is to restore profitability by strengthening our margins, growing profitable volumes, and building on the resilience demonstrated by our commercial fuels, lubricants, and mobility businesses. Thirdly, strengthen our competitive position by deepening customer relationships, enhancing our offers, and capturing growth opportunities across our key market segments. I mentioned earlier, and I will mention it again. We also remain mindful of three key risks.

Lorelie Quiambao Osial: We enter H2 with improving momentum, although the operating environment remains uncertain and still subject to geopolitical policy and weather-related risks. While some of the pressures that affected H1, including supply tightness and extreme price volatility, have eased, I guess for now, the market remains considerably fluid and stable all the time. Against this backdrop, our priorities are clear. First, restore financial flexibility through disciplined cash, working capital, and capital management. The second is to restore profitability by strengthening our margins, growing profitable volumes, and building on the resilience demonstrated by our commercial fuels, lubricants, and mobility businesses. Thirdly, strengthen our competitive position by deepening customer relationships, enhancing our offers, and capturing growth opportunities across our key market segments. I mentioned earlier, and I will mention it again. We also remain mindful of three key risks.

Speaker #4: So, against this backdrop, our priorities are clear. First, preserve financial flexibility through disciplined cash, working capital, and capital management. Second, restore profitability by strengthening our margins, growing profitable volumes, and building on the resilience demonstrated by our commercial fuels, lubricants, and mobility businesses.

Speaker #4: And thirdly, strengthen our competitive position by deepening customer relationships, enhancing our offers, and capturing growth opportunities across our key market segments. As mentioned earlier—and I will mention it again—we also remain mindful of three key risks.

Lorelie Quiambao-Osial: The first one is renewed fuel price volatility and market volatility arising from the geopolitical events that are still not fully resolved. The second one would be regulatory and policy measures that may affect industry economics and margin recovery. The third one is adverse weather conditions that could also impact demand and could even lead to damage to assets. Our focus remains on the factors that are within our control: maintaining supply reliability, supporting our customers, growing profitable volumes, and executing with adaptability and with discipline. If external conditions remain broadly stable, we do expect H2 to be stronger than H1, while continuing to preserve the resilience and financial strength of the business. I want to thank all of you for joining us in today's investor briefing for Shell Pilipinas Corporation. Thank you for your continued trust and for your loyalty. Maraming salamat.

Lorelie Quiambao Osial: The first one is renewed fuel price volatility and market volatility arising from the geopolitical events that are still not fully resolved. The second one would be regulatory and policy measures that may affect industry economics and margin recovery. The third one is adverse weather conditions that could also impact demand and could even lead to damage to assets. Our focus remains on the factors that are within our control: maintaining supply reliability, supporting our customers, growing profitable volumes, and executing with adaptability and with discipline. If external conditions remain broadly stable, we do expect H2 to be stronger than H1, while continuing to preserve the resilience and financial strength of the business. I want to thank all of you for joining us in today's investor briefing for Shell Pilipinas Corporation. Thank you for your continued trust and for your loyalty. Maraming salamat.

Speaker #4: The first one is renewed fuel price volatility and market volatility, arising from the geopolitical events that are still not fully resolved. The second one would be regulatory and policy measures that may affect industry economics and margin recovery.

Speaker #4: And the third one is adverse weather conditions that could also impact demand and could even lead to damage to assets. Our focus remains on the factors within our control: maintaining supply reliability, supporting our customers, growing profitable volumes, and executing with adaptability and discipline.

Speaker #4: If external conditions remain broadly stable, we do expect the second half to be stronger than the first, while continuing to preserve the resilience and financial strength of the business.

Speaker #4: I want to thank all of you for joining us in today's investor briefing for Shell Pilipinas Corporation. Thank you for your continued trust and for your loyalty.

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Q2 2026 Shell Pilipinas Corp Earnings Call

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