Lanka IOC registers positive performance in Q2

Lanka IOC Plc has posted a positive performance for the quarter ended 30 September 2021.

Operating profit rose to Rs. 268 million as against a loss of Rs. 146 million in 2Q of FY21. Pre-tax profit was Rs. 313 million up from Rs. 40.7 million and after tax profit was Rs. 281.5 million as against Rs. 17 million.

Consolidated turnover of the company increased by nearly 10% to Rs. 20.6 billion during the quarter whereas the Cost of Sales increased by around 8% to Rs. 19.5 billion against the corresponding period of previous year. Company’s Interest costs/LC opening charges have increased significantly during the quarter in view of sharp rise in oil prices and increased cost of working capital including import loans.

Finance expenses rose from Rs. 120 million to Rs. 294 million whilst finance income rose from Rs. 307 million to Rs. 339 million.

While declaring the results, Lanka IOC in a statement said that during the quarter the company could offset the auto fuel losses only on account of positive performance in other business segments like lubricants, bunkering and bitumen.  Commenting on the overall performance, Managing Director Manoj Gupta said: “This has been a challenging half year due to the pandemic implications coupled with the steep rising crude prices. We have delivered  a fairly acceptable performance despite incurring heavy losses in the auto fuel segment apart from considerable input cost pressures across all business segments. Nevertheless, while continuing to safeguard the interests of its stakeholders, the company shall always remain committed to serve the nation by ensuring uninterrupted supply of petroleum products.”

Gupta further stated that in view of the global economic recovery, propelled by fast pace COVID-19 vaccination across the globe, the international fuel prices have risen sharply reaching seven-year highs. During the last two months, petrol and diesel prices in the international market have also risen by more than 25% and touched unprecedented levels of $96/barrel in diesel and $103/barrel in petrol. At such levels, the company continues to incur heavy losses on both petrol and diesel.

While being highly appreciative about the vaccination drive and the various strong measures implemented for rebounding of the economy, LIOC has been requesting the Government of Sri Lanka for a suitable price increase in auto fuels and is very optimistic that Government will come out with appropriate solutions to circumvent the losses being presently incurred in auto fuels. “However we have been compelled to effect a marginal increase in the price of fuel by Rs.5/litre, even though the increase shall not at all mitigate the losses being actually incurred,” Gupta added.

First half revenue rose from Rs. 29.4 billion to Rs. 37.4 billion. Operating profit was Rs. 346 million as against a loss of Rs. 1.36 billion in 1H of FY21. Pre-tax profit was Rs. 620 million in 1H of FY22 in comparison to a loss of Rs. 956.8 million and after tax profit was Rs. 554.6 million as against a loss of Rs. 778 million.