Laugfs Gas cut March quarter losses as costs under check

Laugfs Gas PLC cut losses in the January–March quarter as the group managed to keep the costs under check while the revenues rose moderately. 

The downstream LPG player which diversified into myriad of other business sectors such as retail, transport and logistics, leisure, vehicle emission testing and solar power reported a net loss of Rs.389.6 million for the quarter ended March 2018 (4Q18), down from the Rs.747.6 million loss incurred in the corresponding period 
last year. 

The group earned a revenue of Rs. 5.4 billion for the quarter, up 19.0 percent from a year ago. 

Laugfs spun off its leisure, renewable energy and vehicle testing subsidiaries on March 31, 2018 vesting shareholding in such subsidiaries directly in the shareholders of Laugfs Gas PLC in proportion to their shareholding as the management said the non-core businesses undervalue the group and overshadow its true potential. 
“The true value of the company may not be reflected in its share price due to non-core subsidiaries being part of the group, whereas a segregation will result in the company attaining its true potential as a specialized LPG sector business which should be reflected in the company’s share price”, a stock exchange filing by the company said. 

The Laugfs share shed 1.68 percent of its value yesterday to end at Rs.23.40.  

The group trimmed the balance sheet from Rs.35.8 billion to Rs.31.4 billion after spinning of the units. Laugfs became leveraged as the group borrowed heavily on expansion of its operations both domestically and overseas and also to venture out into new business areas but some of the key projects such as its US$ 80 million LPG import–export terminal is facing hurdles in opening for business as scheduled. 

Meanwhile the group made losses of Rs. 1.3 billion for the full year, more than doubling the loss incurred in the previous year of Rs.638 million. 

The group revenues were up 31 percent to Rs.21.4 billion but the direct costs were 43 percent higher at Rs.19.2 billion, 

The higher LPG prices in the global market appear to have pushed up the direct costs over the top-line growth.

The group’s energy business made a net loss of Rs. 1.1 billion from a profit of Rs.81.6 million due to higher LPG prices and an increase of over Rs.400 million in finance costs.

However it is expected these losses could be trimmed going forward as the domestic LPG prices were raised and the issues surrounding the Hambatota Port terminal could be resolved.  

The Employee’s Provident Fund holds 17.28 percent in Laugf’s voting shares being the second largest shareholder in the group and another 34.69 percent in non-voting shares, being the first.