Sri Lanka’s market leader in lubricant sales, Chevron Lubricants Lanka PLC says it has adequate cash flows to continue seamless operations overcoming the expected hit on its financial performance from the prevailing negative business environment caused by the COVID-19 pandemic.
“Based on management’s initial estimates, the company’s financial performance in the short term is expected to correlate with the prevailing negative business environment which continues to evolve. In this context, conservation of cash remains a priority and the company has adequate cash flows (including undrawn credit facilities if required to meet contingencies) to ensure seamless operations,” Chevron Lubricants Lanka Managing Director/ Chief Executive Officer Pat McCloud said in a stock exchange filing, apprising the possible impact of COVID-19 on the company.
He noted that the firm began its preparations for an outbreak of COVID-19 from January onwards as part of its emergency response planning process.
Since March 16th,the firm made arrangements for all its non-essential staff to work from their homes while essential staff to continue to report to work to support blending and distribution of lubricant oils is reporting to our plant in Sapugaskanda.
McCloud stated that blending and filling operations remain lower than normal levels due to the curtailed economic activities in Sri Lanka and among its export markets due to the prevailing curfew/lockdown conditions.
“The company is prioritising operations to support essential services in all of our markets. The company is producing lubricant oils for essential services such as power generation, agriculture, fisheries sector, and government transportation services,” he said.
Further, the management has implemented wide range of safety measures at their head office as well as at the blending plant in Sapugaskanda.
Chevron Lubricants has also implemented several measures to control operational expenses and reduce capital expenditures for discretionary projects.
Aiming to curtail operational expenses, the company has frozen the headcount and deferred all hiring plans, halted all international travel while reducing the annual travel budget, revised its 2020 advertising, sales and promotions budget, and negotiated concessions with certain service providers.
Further, the firm has also decided to discontinue certain planned activities to mange operational expenses.
At the end of last December quarter, Chevron Lubricants maintained approximately Rs.870 million cash and cash equivalent assets.