The Sri Lankan unit of Indian Oil Corporation, Lanka IOC PLC (LIOC) turned a net loss of Rs. 135.2 million in the April - June quarter (1Q17) from a net profit of almost Rs.2.0 billion reported during the same period last year, the interim financial accounts showed.
The loss per share was 25 cents against an earnings per share of Rs.3.75 a share a year ago.
The company’s share shed 2.13 percent of the value or 70 cents to end at Rs.32.10 at the last week’s trading.
The quarterly loss could be attributed to the higher global oil prices during the period compared to the same period in 2016 as the oil producing nations struck a non-binding deal last year to cut production from January 2017 onwards to push prices up.
The deal was extended in May again.
Brent crude oil prices rose to above US $ 55 a barrel by April 2017 from around US $ 40 in April 2016.
LIOC reported revenues of Rs.20.5 billion, slightly up by 8.5 percent year-on-year (YoY) but the cost of sales rose by a faster 26 percent YoY to Rs.19.8 billion during the same period.
Gross profit was only Rs.656 million, down from Rs.3.3 billion a year ago.
However the second quarter is expected to be better for the company due to somewhat eased global oil prices and the temporary boost on the company’s sales during the work stoppage by the state-owned distributor, Ceylon Petroleum Corporation in July.
LIOC is also the second largest lubricant seller in Sri Lanka with a market share of 14.9 percent in 2016.
Sri Lanka has been trying to introduce a fuel pricing formula, which automatically changes the prices in line with the global market prices but the lack of political will has stalled the process.
The new Finance Minister, Mangala Samaraweera has renewed the efforts and is likely to introduce a formula shortly, State Minister of Finance, Eran Wickramaratne was reported to have said at a forum last week.
Samaraweera has been successful in privatizing the state-owned Sri Lanka Telecom in early 1990s which ended consumers being stuck in a
waiting list for years to obtain a fixed residential telephone connection.
Introduction of an energy pricing formula is one of the key conditions under the 3-year, Extended Fund Facility Sri Lanka has with the International Monetary Fund.
By the end of June 2017, Indian Oil Corporation Limited had 75.12 percent stake in LIOC while the state-run Employees’ Provident Fund held 0.44 percent stake in the company being the 12th largest shareholder.