Laugfs Gas PLC returned to profitability in the three months to September (2Q21), as the company sailed on the economic rebound since the easing of the coronavirus lockdowns in May.

Sri Lanka’s only private sector LP gas distributor recorded a revenue of Rs.8.85 billion for the quarter, up 31 percent from Rs.6.77 billion in the comparable period, last year. 

The group reported earnings of Rs.1.02 a share or Rs.395.3 million for the July-September period, compared to 5 cents a share or Rs.17.9 million in the year earlier period. 

In the previous quarter ended in June, the company reported a loss of Rs.182.1 million. 

Despite the cost of sales rose at a faster rate of 43 percent than its top line growth, resulting in a decline in gross profit in the September quarter, the group had practiced much discipline in containing its group-wide overheads and generated a higher other operating income to support its operating level performance. 

At operating level, the group reported a profit of Rs.1.0 billion, compared to Rs.765.9 million in the corresponding period, last year. 

The group booked only Rs.7.4 million as corporate income tax for the period, compared to Rs.96.8 million in the same period, last year. 

The period marked a turnaround quarter for the diversified energy player, who was repeatedly got hammered by the administratively-set household gas prices and debt-funded highly capital-intensive projects, which took longer than expected to generate cash. 

The group took in about Rs.1.6 billion in fresh debt since March 31 this year but the finance cost eased to Rs.639.8 million for the quarter, compared to Rs.662.2 million in the same period, last year, as fast declining interest rates gave space to undertake more debt. 

Its LPG terminal in Hambantota, Laugfs Terminals Limited, which commissioned business in July 2019 after some delay, had the 100th ship call in September and handled 413,000 metric tonnes of LPG valued at US $ 175 million, with 60 percent exported to Bangladesh, the Maldives and India. 

Laugfs Gas has LPG distribution operations in Bangladesh and bets on the country’s low penetration levels to generate growth, as the company is resolving certain issues in its distribution in that country, particularly during the wet season, to ramp up volumes.

Meanwhile, the group in 2018 cleaved off its leisure, power and vehicle emission testing businesses and vested them with similar shareholdings of Laugfs Gas PLC, in a major restructuring exercise aimed at better reflecting the value of its core energy business and then attracting investments. 

The group also has interests in modern trade, petroleum retailing, lubricant blending and distribution, manufacture and export of solid tyres. 

Laugfs Gas in May appointed seasoned professional Piyadasa Kudabalage, who one time functioned as Managing Director at the rival Litro Gas Lanka Limited, as its Group Chief Executive Officer.

Although the segment-wise performance isn’t available separately for its fiscal second quarter, during the first six months, the group’s key energy business generated revenues of Rs.10.8 billion, compared to Rs.12.6 billion in the corresponding period last year. 

This segment reported an operating profit of Rs.718.1 million, compared to Rs.1.15 billion a year ago. 

The transportation and logistics business, which performed well, had revenues of Rs.1.41 billion, compared to Rs.633.3 million a year ago while making an operating profit of Rs.496.7 million, compared to a loss of Rs.191.9 million in the same period, last year. 

The businesses captured under the trading segment generated revenues of Rs.11.2 billion, compared to Rs.4.3 billion last year while the operating profit rose to Rs.133.2 million, from Rs.38.2 million a year ago. 

The Employees’ Provident Fund has a 17.28 percent stake in the company’s ordinary voting shares and a 34.69 percent stake in non-voting shares, being its second and the first shareholders, respectively.