Lanka IOC Sept. profits jump amid easing global crude prices

Lanka IOC PLC reported improved performance for the three months ended September 30, 2019 (2Q20) from the losses in the previous quarter, as oil prices eased somewhat in the world market due to concerns over slowing global economy.  

The local unit of Indian Oil Corporation Limited reported earnings of Rs.517.4 million for the July-September quarter compared to Rs.207.3 million reported for the same period last year. The earnings per share stood at 97 cents. 

During the previous quarter ended in June, the company incurred a loss of Rs. 239.2 million. The top line however fell to Rs.21.5 billion in the quarter under review from Rs.25.6 billion in the year earlier period.

Certain people shunned LIOC fuel stations due to the price difference between their retail prices and that of Ceylon Petroleum Corporation, which were slightly lower. 
Despite the pricing formula, the retail prices at LIOC remained somewhat higher than that of its State counterpart until recently. 

Meanwhile, the world crude prices at Brent also eased from US$ 69 a barrel in April to US$ 65 a barrel in July and further down to US$ 60 in September end.
This is reflected in the 17.5 percent fall in the cost of sales, which is higher than the fall in sales. 

The company appears to have taken the advantage of the fuel pricing formula and the ease in the global prices to turn its fortunes during the quarter under review. 
Lanka IOC is also diversifying its product portfolio as well as its geographical reach in a bid to minimise the adverse impacts that could stem from policy changes in the pricing of fuel. 
The company will treat its bunkering and lubricants operations as key areas of growth and will also look for more export markets to support revenues and earnings.
Last year, the company commenced exports to Indonesia, expanding its export reach.

Meanwhile, for the six months ended September 30, 2019 Lanka IOC reported earnings of Rs.278.2 million or 52 cents a share compared to Rs.453.2 million or 85 cents a share reported for the corresponding period last year. 

Indian Oil Corporation Limited, India owns 75.12 percent stake in Lanka IOC while the Employees’ Provident Fund holds 0.44 percent stake being the 10th largest shareholder.