Laugfs Gas shines with above forecast 1H results

Ups revenue by 34% to Rs. 3.4 b;  Net profit by 46%

to Rs. 423m;

Second quarter more impressive with net profit up 145% to

Rs. 296.4 m

Laugfs Gas Ltd., (LGL) yesterday announced above forecast impressive financial results for the first half of 2010/11 year linking it post-war rebound as well as aggressive marketing.

As per unaudited accounts released, LGL’s consolidated turnover amounted to Rs. 3.4 billion up by 34% over the first half of 2009/10 financial year as well as 18% forecast by the company. Gross profit grew by 31% to Rs. 707.4 million as against forecast of 27%. Pre-tax was up by 45% to Rs. 460.7 million and net profit was Rs. 423 million up 46% in comparison to forecast of 13% and 20% growth respectively.

In the second quarter ended September 30, 2010, revenue was up 32% to Rs. 1.8 billion and consolidated after-tax profit was up 145% to Rs. 296.4 million.

“We are optimistic about the general outlook of the company and the investment climate in the aftermath of the three decade long conflict and the prevailing political stability of the country. In the back drop of this, Laugfs Limited and its subsidiaries are expected to improve performance in the months to come” Laugfs CEO and Chairman W.K.H. Wegapitiya said in a review accompanying results.

He said that in terms of volume the LP Gas Cylinder sales have increased by 37% and in terms of metric tonnage the rise in sales was 22% over the forecast made.

The Group has consolidated further its financial position as reflected in the unaudited Balance Sheet as at September 30, 2010 with a 15% increase in Net Asset value to Rs.3.26 billion. Retained earnings grew by an impressive 50% to Rs. 1.27 billion whilst trade and other receivables decreased by 17% as a result of prudent credit and cash flow management practice adopted. Wegapitiya said that the parent Laugfs Gas Limited and also the Laugfs ECO Sri Limited, a fully owned subsidiary contributed significantly to the growth earned for the group. As for Laugfs Gas, the aggressive promotional campaign commenced in the month of September contributed largely to the growth of profits earned for the group.

“The most dramatic growth revenue within the group with a record of a significant 231.5% increase derived from Laugfs Eco Sri Limited and contributory factor was the government decision to make the eco-test on relevant vehicles mandatory all over the country except the Northern and Eastern Provinces. It is expected however that the scheme will be operational island wide including these two provinces as well as in the near future,” he said.

Commenting on its finance cost reduction for the past six months the Chairman of the Laugfs Group said that the finance cost had reduced to Rs.68.8 million which is an almost 30% reduction from  the corresponding  period last year. This was made possible through prudent working and fixed capital management by the treasury division of the group and finance costs are expected to reduce further in the ensuing months. However the reduction in finance cost did not meet with the expectation indicated in our forecast since the IPO was delayed due to unavoidable circumstances and the proceeds were not available to the entire high cost borrowings” he added.