Shell Pakistan's profit plummets 88% despite increase in sales

MG News | August 26, 2024 at 12:06 PM GMT+05:00

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August 26, 2024 (MLN): Shell Pakistan Limited (PSX: SHEL) reported a dramatic 87.9% decline in profit for the second quarter of 2024, falling to Rs1 billion [EPS: Rs4.69] compared to Rs8.3 billion [EPS: Rs38.79] in the same period last year.

The company's profit and loss account showed a decline in profit despite an 8.7% increase in revenue, which rose to Rs112.45bn compared to Rs103.46bn in Q2 CY23.

The cost of sales rose by a greater proportion which worsened the gross profit by 0.7% to Rs5.95bn in Q2 2024.

Accordingly, the gross margins of SHEL worsened to 5.3% as compared to 5.8% in SPLY.

On the expense side, the company's selling and distribution expenses rose 18.3% YoY to Rs3.35bn. On the other hand, general and administration expenses and other operating expenses fell during the review quarter.

The main factor worsening the oil giant’s earnings this quarter was a substantial decline in other income, which fell to Rs2.79bn in Q2 2024 from Rs11.74bn in the same period last year.

The company’s finance cost also increased by 18.7% and stood at Rs515.78m as compared to Rs434.67m in SPLY, mainly due to higher interest rates.

On the tax front, the company paid a lower tax worth Rs1.16bn against the Rs1.81bn paid in the corresponding period of last year, depicting a fall of 36.2%.

Unonsolidated (un-audited) Financial Results for quarter ended June 30, 2024 (Rupees in '000)
	Jun 24	Jun 23	% Change
Net Revenue	112,449,464	103,460,615	8.69%
Cost of sales	(106,500,522)	(97,467,634)	9.27%
Gross Profit/ (loss)	5,948,942	5,992,981	-0.73%
General and administration expenses	(2,605,221)	(2,685,312)	-2.98%
Selling And Distribution Expenses	(3,353,164)	(2,833,988)	18.32%
Share of profit of associate - net of tax	733,119	140,492	421.82%
Minimum lax differential	(373,879)	-	-
Other Income	2,791,153	11,742,231	-76.23%
Other Operating Expenses	(465,808)	(1,810,275)	-74.27%
Finance Cost	(515,782)	(434,667)	18.66%
Profit/ (loss) before taxation	2,159,360	10,111,462	-78.64%
Taxation	(1,155,093)	(1,809,635)	-36.17%
Net profit/ (loss) for the period	1,004,267	8,301,827	-87.90%
Basic earnings/ (loss) per share	4.69	38.79	-

Amount in thousand except for EPS

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