LIOC’s perseverance yields impressive 3Q performance

Irrespective of the turbulent business environment, Lanka IOC (LIOC) succeeded in extending its robust performance in the previous two quarters on to the third quarter ended December 31, 2022 (3Q23) with remarkable increase in revenue by nearly 225 percent year-on-year (YoY) from Rs.22.99 billion to Rs.74.87 billion for the quarter, mainly in view of the high international oil prices as compared to last year. 

With the rise in market share in the retail fuel segment pursuant to enhanced consumer confidence, the sales volume during the quarter increased from 132,761 MT to 158,162 MT with YoY volume posting an increase of nearly 19 percent. 
Accordingly, LIOC posted a net profit of Rs.8.23 billion for the quarter.

The earnings per share of the company during the quarter also increased from Rs. 1.7 in 3Q of the previous year to Rs.15.5 during 2Q23, reflecting LIOC’s relentless pursuit to maximise return for stakeholders. 
However, with extremely high borrowing costs and unprecedented LC confirmation costs due to significant country risk perceived by banking institutions, the finance costs during the quarter were nearly Rs.655 million as against Rs.270 million YoY significantly affecting 3Q23 performance. 

The introduction of Social Security Contribution Levy with effect from October 1, 2022 also led to an additional outgo of Rs.753 million during the quarter.
Describing the performance, LIOC Managing Director Manoj Gupta said, “With our commitment to ensure regular and uninterrupted fuel supplies to the nation while maximising value creation for our stakeholders and also returning back to the society, we shall continue our efforts to not only live up to the expectations but also go beyond. 

We feel happy in sharing that LIOC has enhanced its footprints in the country with the commissioning of 14 new sheds in a record time of last one month. We promise to enhance our role in energy security of the country opening up many more sheds in the coming months.” The company was granted approval by the government to open 50 new retail sheds. Considering the earlier approval for 46 new sheds already with the company, LIOC is in the process of finalising the process of commissioning around 60 new sheds by March 2023 across the length and breadth of the country, which shall further strengthen its national presence and act as a testament to it playing a national role in meeting country’s energy requirements.

Gupta further stated that while all the business verticals of LIOC remain committed to contribute, Bunkering and Lubricants continue to face stiff competition mainly due to demand uncertainties in view of the economic slowdown and sharp fluctuations in the international oil prices for which the company is leaving no stone unturned in taking appropriate measures, in their efforts to close the financial year with an unprecedented financial and operational performance.

The periodical revision in Retail Prices (RSP) of auto-fuel in line with the common pricing formula has been beneficial for the company as well as the people at large in view of recent RSP reductions which LIOC has also implemented in line with CPC prices.
However, the significant volatility in international oil prices due to geo-political factors continues to remain a cause of concern,which adversely affects the decision-making process.