Hefty finance costs, overheads weigh on Laugfs Gas March quarter

S r i La n k a ’ s downstream energy supplier, Laugfs Gas PLC saw its March quarter (4Q16) net profit narrowing by as much as 74 percent to Rs. 96.6 million with an earnings per share of 25 cents from a year ago due to larger debt servicing costs and higher overheads weighing on the company, the interim results showed. The company share closed one rupee or 2.38 percent down at Rs.41 during last week’s trading. T h e s t r o n g e r growth in top line – by 42 percent – yearon- year (yoy) was able to make limited impact on the bottom-line as the cost of sales rose 55 percent yoy to Rs.2.97 billion. The revenue was Rs.3.90 billion. The distribution costs jumped 82 percent yoy to Rs.278 million while the administrative expenses rose 61 percent yoy to Rs.495 million. The operating profit was down 12 percent yoy to Rs.395.7 million.

The finance cost soared 567 percent yoy to almost Rs.200 million amid rising group debt. Laugfs in recent times is seen restructuring its group companies and tightening its grip over its Bangladeshi operations by infusing more investments. During the year to March 31, 2016, the group borrowings – short and long term – sharply increased from Rs.2.95 billion to Rs.11.66 billion. In March 2016 the company acquired the total shareholding of Laugfs Terminals Limited at Rs.10 per share and the latter is constructing liquefied petroleum gas storage terminal in Hambantota. S u b s e q u e n t l y Laugfs Gas PLC transferred another Rs.1.14 billion to Laugfs Terminals Limited to be made as an advance payment to a Chinese contractor engaged with the company in building the above gas storage. In April 2016, the company further infused US $ 9.45 million (Rs.1.39 billion) in equity in to its wholly owned Dubai-based subsidiary, Slogal Energy DMCC to acquire the balance 31 percent stake in Laugfs Gas (Bangladesh) Limited from Elpiji (M) Sdn Bhd of Malaysia. Meanwhile, for the year ended March 31, 2016 the company made a profit of Rs. 1.28 billion or Rs.3.32 a share, down 11 percent. The top-line rose 15 percent to Rs. 13.3 billion.

The finance cost for the year was Rs.442 million, up 251 percent. The group’s energy segment narrowed its net profits by 24 percent to Rs.1.19 billion. The revenue was Rs.11.8 billion, up from Rs.10.2 billion. The group leisure and hospitality business narrowed losses to Rs.113.4 million from Rs.162.1 million. The revenues rose 45 percent to Rs.355.8 million. The transportation and logistics segment increased its net profits by 451 percent to Rs.184.8 million. The revenue rose 276 percent to Rs. 879.8 million. Laugfs Holdings Limited held 73.45 percent stake in Laugfs Gas PLC while the state-controlled private sector pension fund, Employees’ Provident Fund held 17.28 percent stake, being the second largest shareholder of the company as of March 31, 2016.