Our second Annual and Sustainability Report is a testament to our continued growth alongside the nation. We have been in the Philippines for the past 103 years, and in our second year as a listed company, we hope to collaborate with shareholders who share the same mindset of sustainability, and long-term commitment. Owning a part of Pilipinas Shell is not only a solid investment; it is a partnership with an organisation that seeks to balance short- and long-term interests, with consideration to the triple bottom line - economic, environment, and social performance.
Sound business management and corporate practices have helped us maintain stable financial health. In 2017, our financial performance continues to be driven by the strength of our marketing businesses. Pilipinas Shell’s year-on-year earnings surged 39% to close 2017 with a net income after tax of Php 10.4 billion. Our dividend payout of 80% exceeds our dividend policy of a minimum of 75% of prior year’s income. Our level of earnings and dividend payout position our dividend yield as one of the highest in the industry.
Our retail business continued its steady growth and efficient operations. Retail volumes grew by 4%, higher than industry, with the average station throughput double that of the industry average. Our premium fuels business exhibited robust sales this year, helped by our launch of V-Power with DYNAFLEX technology.
We also strengthened our branded non-fuel retail offerings, such as Shell Select and deli2go, to maximise the value we can generate from our retail stations. Today, we have 102 Shell Select convenience stores and 41 deli2go stores nationwide. Due in part to our focus on convenience retailing, our non-fuel retail business enjoyed double-digit growth in 2017.
In 2017, our commercial fuels business was affected in part by lower demand from the power sector. However, the team worked hard to make a strong recovery in the latter half of the year, managing to win new accounts and grow volumes in new commercial sectors.
Shell Aviation celebrated 55 years of operations in the country. In 2017, we expanded our refueling network to include the Mactan-Cebu International Airport, currently the second busiest terminal in the country.
Our supply chain also continues to extract value and reap financial and operational benefits from the North Mindanao Import Facility (NMIF), which has helped significantly reduce stockouts. Our Tabangao refinery successfully completed its planned two-month turnaround with excellent safety record.
Going into 2018, we expect to complete our bitumen production facility inside the refinery. This should allow us to produce bitumen locally and help us support the government’s infrastructure program. The bitumen production facility positions Pilipinas Shell to participate in public-private partnerships to build the infrastructure necessary for business and economic growth, as well as export some bitumen raw materials, as appropriate to other countries.
Our commitment to nation-building also means generating quality jobs. Pilipinas Shell directly employs over 700 people and help generate employment to approximately 25,000 more through our business partners and suppliers such as our retailers, hauliers, and construction and maintenance contractor companies.
Through Pilipinas Shell Foundation, Inc. (PSFI), the social arm of Shell companies in the Philippines (SciP), we also made significant social investments. In its 35 years of existence, PSFI has touched more than 12 million lives. Through Movement Against Malaria, PSFI has helped move the country forward in its fight against the malaria epidemic. Thanks in part to the programme, 42 provinces in the country have been declared malaria-free as of 2017, with 92% reduction in the total number of cases and 98% reduction in deaths due to malaria.
At Pilipinas Shell, sustainability means strengthening our operations to allow us to become a stable and reliable company for the benefit of our stakeholders. Our strategy is to strengthen our leadership in the oil and gas industry to create a world-class investment case for our shareholders. Our ambition is to be able to supply high-quality fuels to serve the needs of our developing nation, as we uplift the lives of its citizens. Moving forward, we will continue to bolster our efforts towards promoting and practicing sustainability.
Cesar G. Romero
President and Chief Executive Officer
Pilipinas Shell Petroleum Corporation