13 May 2021 03:25 am
Relatively low global oil prices and the resurgence seen in economic activities in the first three months of 2021 helped Lanka IOC PLC to deliver a profit in the period ended in March
2021 (4Q21). Sri Lanka’s only private sector distributor of petroleum products reported revenues of Rs.20.7 billion for the quarter compared to Rs.22.2 billion in the same period a year earlier when the economy made a similarly robust rebound from the fiscal and monetary stimulus unleashed since the start of that year before it came to a halt by mid-March due to virus induced economic shutdowns.
As Sri Lanka is nearly having a déjà vu moment at present with the rate at which restrictions on economic activities are slapped, that will significantly slowdown revenues in companies such as Lanka IOC as people fearing COVID have greatly cut down
on travel.
However, unlike last year, the downstream players will not have the advantage of lower oil prices as prices have soared since then as the world’s major economies are returning to normalcy, putting the pandemic behind them.
For instance the prices at the Brent futures exchange, the global benchmark for oil has risen from US$ 29.63 to US$ 68.67 a barrel during a year through May 11.
Although year-over-year revenues were slightly down, on a quarter-on-quarter basis, Lanka IOC made a huge advance from Rs.16.6 billion revenues in the previous quarter ended in December 2020, as people went back to work, took excursions, industrial activities gained steam and the lives returned to near normalcy with the ease of virus related restrictions.
The company reported earnings of Rs.1.83 a share or Rs.973.9 million in the January-March quarter compared to a loss of 66 cents a share or Rs.346.2 million in the same period in 2020.
For the full year ended in March 31, 2021, the company reported earnings of Rs.1.66 a share or Rs.882.6 million compared to earnings of 79 cents a share or Rs.421.8 million in the previous fiscal year.
Lanka IOC is also enjoying the fruits of the lower interest rates as the finance cost of the company slumped to Rs.476.3 million in the year ended in March 2021 from Rs.977.6 million last year, notwithstanding fresh borrowings accumulated during the year.
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.
As of March 31, 2021 Indian Oil Corporation Limited held 75.12 percent stake in Lanka IOC.