Despite the operational challenges stemming from forex crisis, inflation and higher global oil prices, Lanka IOC PLC reported robust performance for the quarter ended June 30, 2022 (1Q23) with significant growth in revenue and profits while the Indian government continued to brag their “economic assistance” to revive Sri Lanka’s broken economy.
The company said its revenue increased by 196 percent year-on-year (YoY) to Rs.49.93 billion. The Sales volume of the company also increased to 139,762 MT from 135,354 MT on YoY basis.
The cost of sales for the quarter was Rs.34.4 billion compared to Rs.16 billion a year ago as a result of the steep rise in international oil prices.
The company reported earnings of Rs.18.64 per share for the quarter under review on net profit of Rs.9.93 billion compared to earnings of 51 cents a share or Rs.273 million in the corresponding quarter of the previous year.
However, Lanka IOC said the sudden devaluation of currency from Rs.299 to Rs.367 per US$ coupled with extremely high borrowing costs, raised its finance expenses during the quarter to Rs.1.79 billion as against Rs.123 million a year ago.
“The company ventured into a new line of business of selling diesel directly to export houses, tourism services providers registered under Sri Lanka Tourism Development Authority, licensed telecommunication service providers and power generation companies, against remittance in US dollars. The collection in US$ eliminated the exchange rate risk and allowed sale of fuel to industries at a predetermined price,” Lanka IOC Managing Director Majoj Gupta said.
“On the other hand, it met the essential fuel requirement of innumerable industries which are responsible for livelihoods of millions of employees and their dependent family members. It is beyond imagination to believe the repercussion in case fuel requirements were not met on time.
I am so indebted to my workforce at Trincomalee Terminal who have had a round-the-clock operation of the terminal for more than 3 weeks with limited resources to supply fuel not only to industries but also to ensure supply of 7500 MT of diesel to CPC for onward dispatches for essential services,” he added.
Gupta also said the company’s bunkering business has registered exceptional performance, amid the exchange gain in view of depreciation of the currency, as sales take place in US$.
He further said the revision in retail prices (RSP) for auto-fuel in line with the pricing formula has been beneficial for the company.
“RSP revisions played a crucial role in circumventing the price volatility in the international oil market to a large extent. The bottom-line of the company has also been transformed by exceptional performances by Lubricants, Petrochemicals and Bitumen. We are extremely grateful to CBSL authorities and Ministry of Power and Energy, GoSL for their continuous support,” Gupta said.