Shell Pakistan shines in 1QCY17
Shell Pakistan Limited (PSX: SPL) took a leap in earnings for 1QCY17 with profit after tax shooting up by over 60 times. After a lull primarily due to oil prices, Shell Pakistan picked up pace and delivered a healthy financial performance in 2016. Despite high inventory losses that the firms incurred due to lower oil prices, the OMC has been lift earnings, which is partly due to its retail and operations endeavours. It wouldn’t be wrong to say that the firm turned things around significantly as it has trotted upwards from a loss of over a billion rupees in CY14 to a positive bottom-line of over Rs6.7 billion. Not only that, the earnings for CY16 were higher than the firm’s annual earnings in at least the last ten years.
A key factor in the increased top line has been the increased petroleum product sales especially that of retail fuels such as petrol and diesel, which has made its way through 2015 and 2016 to 2017. Volumetric sales for key petroleum products for 2016 show an increase of 12 percent year-on-year, whereas the growth over 2014 cumulative figure has been over 20 percent.
The Chief Executive’s Review that accompanied the 1QCY17 result highlights that firm continues to be burdened by the overdue receivables from the government of Pakistan, which results in rising finance cost. Total outstanding receivables stood at Rs4639 million as on March 31,2017
Shell Pakistan has introduced Shell V Power – premium gasoline, and Shell Advance Ultra – top tier lubricant for motorcycles as the market for premium gasoline made it way post deregulation. Will the increased pace in petroleum consumption continue in 2017? The data for first three months of 2017 show that retail growth in volumetric sales has continued. Market believes that consumption of retail fuels will continue to guide the overall petroleum consumption.
SHELL PAKISTAN LIMITED
Rs (mn) 1QCY17 1QCY16 YoY
Net sales 48,924 42,676 15%
Cost of sales 44,796 40,697 10%
Gross profit 4,128 1,979 109%
Distribution and Marketing expenses 1,297 1,115 16%
Administrative expenses 940 965 -3%
Other operating expenses 209 13 1456%
Other income 90 167 -46%
Operating profits 1,773 52 3278%
Finance costs 51 30 67%
Share of profits from assc 174 139 26%
Profit before tax 1,896 161 1080%
Tax 500 139 259%
Profit after tax 1,396 21 6467%
EPS (Rs/share) 13.05 0.20 6425%
Gross margin 8.44% 4.64%
Operating margin 3.62% 0.12%
Net margin 2.85% 0.05%
Source: PSX Announcement.
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