Shell Pakistan swings to profits in Q1

April 22, 2021 (MLN): Shell Pakistan Limited (SHEL) returned to profitability in the first quarter ended March 31, 2021, gaining Rs 1.95 billion in net profits (EPS: Rs 11.17), against losses of Rs 4.33 billion (LPS: Rs 28.03) in the same period a year earlier.

The move to profits was helped by a 22% YoY rise in the net sales due to 26% higher volumes which were distorted by the COVID-19 outbreak in the same period last year, wrote Muhammad Saad Ali, Head of research at Intermarket Securities (IMS). As a result, the gross profits of the company surged by 5.34x YoY to Rs 3.99 billion during the said period.

The company’s earnings were further strengthened by a decrease in other expenses as they came down by 92.6% YoY to Rs 124 million.

Other income of Rs 1.4 billion points to exchange gains, in line with IMS estimate. This emanates from a 5% PKR appreciation against the USD. The research highlighted that without these gains (Rs 4.6 per share after-tax), the headline EPS would be at least half the actual result.

As per the financial statement issued by the company, the other positive highlights include a 36.6% YoY decrease in finance cost.

Meanwhile, the effective tax rate came down by 10% YoY to Rs 212 million during 1QCY21.

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