Higher LPG prices, borrowings dent Laugfs December quarter

Diversified conglomerate, Laughs Gas PLC, saw its October-December quarter going into red while its nine months profits also falling sharply despite the top line recording gains, the interim results showed. 
The group reported a loss of 48 cents a share or Rs.185.7 million for the quarter compared to a net profit of Rs.265.7 million earned year-on year (YoY).
The group made revenue of Rs.4.8 billion, up 21 percent YoY, while the cost of sales rose by 26 percent to Rs.3.7 billion. 
For the nine months ended December 31, 2016, the group made earnings of 28 cents or Rs.109.6 million against a profit of Rs.1.1 billion YoY.
The revenue was Rs.13 billion, up 38 percent YoY. The cost of sales rose at a higher pace of 43 percent YoY to Rs.9.5 billion but the gross profit rose by 28 percent Yoy to Rs.3.5 billion. 
The Laugfs group Chairman and CEO, W. K. H. Wegapitiya said the significant increase in LPG prices in a the world markets had a substantial negative impact on the bottom line and they are engaging with the authorities for a possible price revision.  “…in order to effectively counteract the impacts of these global trends, we have already engaged with the relevant stakeholders for a realignment of prices,” Wegapitiya said in an earnings release. 
Laugfs has interests in power & energy, leisure, property development and transportation & logistics but the group energy business accounts for 91 percent of the revenue.  
During the nine months, the group’s fresh borrowings rose by around Rs.5.5 billion, most of which were used to fund the new investments, which are yet to contribute positively to the group financials.  
As a result the finance cost rose by 218 percent YoY during the quarter and 301 percent YoY for the nine months to Rs.403.5 million and Rs.971.1 million, respectively. 
In its latest venture, Laugfs purchased another LPG carrier vessel in January 2017 for US $ 2.875 million. 
With the exception of transportation and logistics business, all the business units either contracted their profits or made losses during the nine moths. 
“ While some of our long term investments have also had a significant negative impact on our financial results, we remain positive and confident of the long term returns these will yield,” Wegapitiya added. 
The State controlled private sector pension fund, Employees’ Provident Fund had 17.28 percent stake in Laugfs Gas as of December 31, 2016.