Lanka IOC PLC (LIOC), the unit of Indian Oil Corporation Limited has reported earnings of 48 cents a share for the October-December quarter against Rs.1.66 a share earned a year ago.
This is a decline in profits as much as 71 percent year-on-year (YoY) to Rs.257.5 million as the company was hit by the rising taxes and in part by the recovery in global crude oil prices.
The revenues rose by 13 percent YoY to Rs.20.6 billion.
In June, last year the import duty on diesel was increased by Rs.6.00 a litre and in August the excise duty was also raised by Rs.10.00 a litre but the company was unable to pass on the cost to the customer as the oil prices were controlled.
“This may impact the performance of the company in the forthcoming periods,” LIOC said in a note to its interim financials.
The global crude oil prices recovered due to productions cuts by the OPEC and non-OPEC countries that came into effect from January 2017 pushing the prices of a barrel north of US $ 56.
LIOC is a frequent victim of administered selling prices by the government and the volatility in the global crude oil prices due to the absence of a pricing formula.
Repeated promises by successive governments to introduce a pricing formula for fuel has now become just a campaign slogan as nothing happens once they get elected because fuel is a commodity, which can easily be manipulated to take advantage in their re-election bid.
Meanwhile, for the nine months ended December 31, 2016, LIOC reported earnings of Rs.6.98 a share or Rs.3.72 billion against just Rs.680.2 million earned during the corresponding period last year.
The revenues rose by15 percent YoY to Rs.60.7 billion.
As of December 31, 2016, Indian Oil Corporation Limited held 75.12 percent stake in LIOC while the Employees’ Provident Fund held 0.44 percent stake being the 12th largest shareholder.