Phoenix lacks the retained earnings to pay PNX4 and PNX3B divs

The PSE sought an update from Dennis Uy’s Phoenix Petroleum [PNX 4.42 unch] [link] on the non-payment of dividends to shareholders of its PNX4 preferred shares and PNX3B preferred shares. PNX responded that it reported a deficit in FY22, and that its auditors are still “in the process of auditing” the company’s FY23 financial statements. PNX summarized by saying, “As of the moment, there are no retainable earnings and hence, the Company is unable to delare and payout any cash dividends for any class of shares.” PNX noted that it has prioritized “fulfilling its obligations to its suppliers, creditors, and shareholders.” PNX added that the PNX4 and PNX3B preferred shares are cumulative, meaning that any missed payments would “still accrue to the shareholders.” The company concluded by saying that it is “still finalizing our strategies”, but it declined to specify the strategies in question or the goals they aim to achieve.

MB bottom-line: Will PNX’s FY23 financials show any retained earnings that can be applied to dividend payments? Almost certainly not. Their Q3 Quarterly Report showed that it was still losing over P1.6 billion per quarter, and had already racked up P3.6 billion in total losses over the first nine months of the year. At that pace, PNX would be lucky to finish FY23 with anything less than P5 billion in total losses. The non-payment of dividends on PNX4 and PNX3B is likely to continue. While it’s true that the unpaid dividends are still owed to PNX4 and PNX3B shareholders, that doesn’t mean a lot if PNX can’t turn a profit to generate the retained earnings to make those payments. 

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