Laugfs Gas deep in red amid higher sales costs, finance expenses

Laugfs Gas PLC, the country’s only privately-owned LPG distributor, recorded a heavy loss for the period ended December 31, 2019 (3Q20) amid rising sales costs and higher finance expenses.

The downstream energy operator of liquefied petroleum gas for residential and industrial use, saw its top line rising by 22 percent year-on-year (YoY) to Rs.7.8 billion in the three months under review, but direct costs rose by a faster 32 percent YoY to Rs.7.2 billion, weighing on gross profits. 

Sri Lanka has a duopoly for LPG distribution with State-owned Litro Gas Lanka Limited. Their performance is at the mercy of global LPG prices as local prices are administered by the State. 
Currently, the refilling price of a 12.5 kilogram cylinder—the commonly used residential gas cylinder is regulated at Rs.1, 493 form the earlier Rs.1,733. 

At operational level, Laugfs Gas reported a profit of Rs.16.4 million, down from Rs.301 million in the year earlier period. 

Heavy borrowings weighed on the group’s bottom line as debt was allowed to accumulate to support working capital amid recurring business expenses coming 
under strain.

The group’s short term debt rose by Rs.4.4 billion during the nine months to December 31, 2019. 

The long-term borrowings fell by Rs.1.6 billion during the same period to Rs.13.5 billion. 

The group has payables of Rs.6.5 billion, up from Rs.4.6 billion as at March 31, 2019. 

The cash balance as of December 31, 2019 was Rs.2.6 billion. 

The finance costs rose by 26 percent YoY to Rs.648.9 million for the three months. 

The group reported negative earnings of Rs.1.52 a share or Rs.588.7 million in total losses compared to negative earnings of 77 cents a share or Rs.297.1 million in losses in the corresponding period a year ago. 

Meanwhile, for the nine months ended December 31, 2019, Laugfs Gas reported negative earnings of Rs.2.17 a share or Rs.839.2 million in total losses compared to Rs.833.9 million losses in the corresponding period of 2018. 

The nine months revenue stood at Rs.20.7 billion, up 13 percent YoY. 

Laugfs Gas share last traded at Rs.15.90. 

The group’s net assets per share took a severe beating to 10 cents as at December 31, 2019 from Rs.3.66 nine months ago.

In 2018, Laugfs Gas PLC cleaved off its leisure, power and vehicle emission testing businesses in a major restructuring move to consolidate its energy operations.

As of December 31, 2019, State-managed private sector pension fund, the Employees’ Provident Fund (EPF) held 17.28 percent in Laugfs Gas voting shares being the second largest shareholder with another 34.69 percent stake in non-voting shares, as the single largest shareholder.