August 21, 2020 (MLN): Shell Pakistan Limited has observed 5.4x increase in net losses after tax for the half year ended on June 30th, 2020 from Rs 1.44 billion to Rs 7.87 billion. This has caused the loss per share of the company to increase substantially from Rs 13.53 to Rs 73.66, up by 444% YoY.
The rise in company’s losses was mainly attributable to lower net revenues which shrank by 29% YoY.
The sharp decrease in the oil prices due to plunge in global oil demand amid Covid-19 pandemic resulted in exceptionally high inventory losses during the first quarter of 2020, which in turn has significantly impacted company’s financial performance.
During the period, the oil industry also felt the impact of the declining fuels market in Pakistan owing to the nationwide lockdown measures enforced by the Government including countrywide closure of non-essential businesses, factories and public transport.
According to the report by Fortune Securities, the much maligned decision to deter import of petroleum products during lockdown contributed towards the fuel shortage, subsequently pushing OMC’s into a precarious position where they were left with minimal inventory in their storages and pipelines, moreover, they were inevitably looking at glaring inventory losses on the horizon.
Due to this, SHEL observed a margin attrition in all 3 retail segments (HSD, HOBC and MS) on quarterly basis, loss in market share combined with current 30% lower retail prices translated into decline in company’s topline, the report added.
On the costs front, the company witnessed 12% YoY decline in Distribution and marketing cost and 65% YoY reduction in other expenses, while finance cost increased by 18% YoY.
In addition to this, company also enjoyed a tax rebate of Rs 235 million which provided a cushion to company’s earnings.
Financial Results for the Half year ended June 30th, 2020 ('000 Rupees) | |||
|---|---|---|---|
| Jun-20 | Jun-19 | % Change |
Sales | 84,398,699 | 116,844,907 | -27.77% |
Other revenue | 151,408 | 436,810 | -65.34% |
Total revenue | 84,550,107 | 117,281,717 | -27.91% |
Sales tax | (13,004,816) | (16,136,493) | -19.41% |
Net revenue | 71,545,291 | 101,145,224 | -29.26% |
Cost of products sold | (72,797,420) | (92,728,582) | -21.49% |
Gross profit | (1,252,129) | 8,416,642 | -114.88% |
Distribution and marketing expenses | (3,030,144) | (3,448,858) | -12.14% |
Administrative expenses | (2,794,676) | (2,360,077) | 18.41% |
Other expenses | (1,123,796) | (3,245,246) | -65.37% |
Other income | 401,761 | 378,350 | 6.19% |
Operating profit/ (Loss) | (7,798,984) | (259,189) | 2908.99% |
Finance costs | (858,983) | (726,846) | 18.18% |
| (8,657,967) | (986,035) |
|
Share of profit of associates – net of tax | 549,855 | 460,094 | 19.51% |
Loss before taxation | (8,108,112) | (525,941) | 1441.64% |
Taxation | 235,067 | (921,517) | -125.51% |
Net Loss for the year | (7,873,045) | (1,447,458) | 443.92% |
Loss per share – basic and diluted (Rupees) | (73.62) | (13.53) | 444.12% |
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