Lanka IOC PLC (LIOC) saw its losses narrowing during the quarter ended March 31, 2018 (4Q18), due to the strong increase in sales while the company committed to keep its costs in check as the oil prices in the global market made notable gains during the previous 12 months.

The local unit of Indian Oil Corporation Limited reported a net loss of Rs.92 million or 17 cents a share for the quarter, compared to a Rs.652.1 million loss or 1.22 loss per share reported in the corresponding period, last year. 

The administrative expenses declined to Rs.12.9 million from Rs.269.1 million in the same period last year. 

Meanwhile, the top line of the downstream operator rose by 17 percent year-on-year (YoY) to Rs.23.8 billion. 

The cost of sales also rose by a similar percentage to Rs.23.8 billion, leaving the firm with a razor thin gross profit for the period. The end of March increase in gasoline prices by the company had no time to make an impact to the March profits.

During the last 12 months, the Brent oil price – the benchmark price applicable on crude imports to Sri Lanka and majority of nations – rose from US $ 48.73 a barrel to US $ 76.85, as the agreement between the OPEC and non-OPEC members extended to curb production until price stabilizes. 

The Saudi Arabian government seeks to push the crude prices up to US $ 80 a barrel as lower prices forced to cut their federal spending since 2015 and hurt their growth. 

In a latest development, US President Donald Trump on Tuesday walked away from the Iran nuclear deal, which will result in reimposition of sanctions against the country, which could provide a further fillip to the oil prices.

Meanwhile, it now appears that LIOC stocks adequate fuel for many months, as the inventory had risen sharply to Rs.10.1 billion by end-March from Rs.4.8 billion a year earlier. 

Maintenance of larger stocks may have prompted by the fuel stock-out faced by the country last year, which lasted for more than a week. 

During the fuel stock-out, LIOC was blamed for making an attempt to retain a ship containing of inferior quality oil. The company denied the charges. 

LIOC, the only private sector importer and distributor of refined petroleum products, has three storages in Kolonnawa, Muthurajawela and Trincomalee. 

Meanwhile, for the full financial year ended in March 31, 2018, the company incurred a net loss of Rs.744.2 million or loss per share of 1.40 from a net profit of Rs.3.1 billion or Rs.5.76 a share, a year earlier. 

The top line grew by 13 percent YoY to Rs.91.3 billion for the year under review.

The parent, Indian Oil Corporation Limited, owns a 75.12 percent stake in LIOC.