Lanka IOC PLC (LIOC), becoming one of the early filers of interim results for the July-September (2Q21) quarter, reported an operating loss for the period, largely due to elevate costs and somewhat downbeat revenues, as people pumped less gasoline into their cars as they cut down on their travelling amid the pandemic.
However, the company avoided itself going into red on lower borrowing costs and significantly lower tax charges.
The only private sector distributor of refined petroleum in Sri Lanka reported revenues of Rs.18.7 billion for the period compared to Rs.21.5 billion in the comparable period last year, down by about 13 percent.
However, the revenues nearly doubled from Rs.10.7 billion in the April-June quarter (1Q21), reflecting the increased mobility of people with the end of countrywide lockdowns in mid-May. Lanka IOC is also into bunkering, bitumen and petrochemicals, and is the second largest lubricant marketer in the country with a market share of 15 percent, after Chevron Lubricants. The company’s costs however held stubbornly during the quarter under review as direct costs stood at Rs.18.2 billion, down only 8.4 percent from the year earlier period.
The crude oil prices in the benchmark Brent futures exchange recovered to US$ 40.95 a barrel by September 30 regaining from US$ 19.33 a barrel hit on April 21, touching the lowest so far this year on fears of weaker global demand for oil at the height of the pandemic.
By October 21, 2020 the price of an oil barrel at Brent exchange was at US$ 41. 73. As crude and refined petroleum products are bought at futures markets, the prices from July through September may reflect the prices contracted in the previous couple of months by the company.
The higher costs plunged LIOC into an operating loss of Rs.146.2 million compared to a profit of Rs.700.2 million in the year ago, but this was a fraction of the loss of Rs.1.22 billion incurred in 1Q21. The downstream petroleum sector player reported earnings of 3 cents a share or Rs.17.2 million for the quarter under review compared to earnings of Rs.97 cents a share or Rs.517.4 million in the comparable period last year.
The company’s finance cost during the period fell to Rs.120.4 million from Rs.281.5 million in the year earlier period as it refinanced loans at lower rates.
The company estimated its corporate income tax at Rs.23.5 million for the quarter under review compared to Rs.127.9 million in the year earlier period.
The company’s share ended at Rs.22 yesterday, 40 cents or down 1.79 percent.
Indian Oil Corporation Limited holds 75.12 percent stake in LIOC.
During 2Q21, Sri Lanka Insurance Corporation entered the top 20 shareholders of LIOC by becoming the third largest shareholder with 1.22 percent stake held via its life fund.
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