Lanka IOC delivers strong 3Q performance

Lanka IOC PLC (LIOC) reported strong top and bottom line performances for the three months ended in December 2021 (3Q22) after the back-to-back price increase authorised by the government last year while the crude oil futures climbed to seven-year highs on geopolitical tensions in Europe and the Middle East last week.  

The only private sector downstream petroleum operator in the country reported revenues of Rs.22.99 billion for the October-December quarter, compared to Rs.16.59 billion in the year earlier period, recording a 38.6 percent growth in the top line. 

Sri Lankan government authorised the second fuel price increase in the third week of December after raising prices in the first week of June last year to fend off the balance of payment pressure coming from the sharply rising global oil prices accompanied by the global commodities 
prices boom. 

The prices at the Brent crude futures hit US $ 87.55 a barrel on January 17, reaching the highest since the 2014 shale-induced oil crash, setting off the opposite movement in global oil prices.

The price of a barrel was trading at US $ 88.38 yesterday at the Brent Crude Oil Continuous Contract, after adding 50 cents or 0.57 percent. 

Oil prices have gained US $ 9.44 or nearly 12 percent since the start of 2022, over the geopolitical tensions in Europe and the Middle East amid supply jitters and the energy market experts do not rule out oil prices hitting of US $ 100 a barrel in 2022. 

Lanka IOC, the local unit of the Indian energy sector juggernaut, reported profits of Rs.889.7 million for the three months under review or Rs.1.67 a share, compared to earnings of Rs.686.9 million or Rs.1.29 a share in the year earlier period, which translated into 29.5 percent growth. 

In the nine months through December 2021, the company reported profits of Rs.1.44 billion or Rs.2.71 a share, from a loss of Rs.91.3 million or loss per share of 17 cents. 

The company was seen maintaining an inventory worth of Rs.18.5 billion, nearly twice from the Rs.9.6 billion stocks it had at the close of the previous financial year ended on March 31, 2021. 

The company was in the limelight lately as it invested 49 percent shares in Trinco Petroleum Terminal (Pvt.) Limited (TPT), a joint venture with state-owned Ceylon Petroleum Corporation to develop 61 oil tanks, the related area and allied facilities in the Upper Tank Farm of the China Bay Oil Tank Farm. 

“LIOC has entered into a Modalities Agreement with CPC and TPT for the possession, development and use of China Bay Oil Tank Farm by LIOC, CPC and TPT,” the company said in its interim financial accounts.

“LIOC has entered into a Lease of State Land with the Government of Sri Lanka for a term of 50 years for the purpose of developing of the Lower Tank Farm of the China Bay Oil Tank Farm,” the company added. 
The company’s share rose Rs.20.60 to Rs.73.20 between September 30 and December 31, 2021.
Lanka IOC share was trading at around Rs.66.50 at mid-day, yesterday. 
Indian Oil Corporation Limited owns a 75.12 percent stake in LIOC.