Shell Pakistan – the second largest oil marketing company in the country – posted a massive 74% drop in profit, down Rs 247 million in the quarter that ended June 30, 2018 due to a decline in sales, surge in the distribution and marketing expenses plus administration expenses as well. The company had recorded earnings of Rs 942 million in the same quarter of the previous year.
The earnings per share (EPS) came down to Rs 2.31 in April-June 2018 from Rs 8.81 in the corresponding quarter of the previous year.
The board of directors recommended an interim cash dividend of Rs 7 per share.
Net sales dropped 3.85% to Rs 57.14 billion in the following quarter from Rs 59.43 billion in the same quarter last year. Cost of products sold rose 3.04% to Rs 44.46 billion from Rs 43.51 billion.
The administrative expenses increased to Rs 1.52 billion, up 11% from Rs 1.37 billion last year. The paid taxes decreased to Rs 57 million, which decreased by 88% from Rs 482 million in the same period last year.
Shell Pakistan Limited’s profits for the half year also dropped by 31.43 % to Rs 1.60 billion compared to Rs 2.33 billion reported last year.
For the six month period that ended June 30, 2018, the company reported a 9.32% decrease in sales while other revenue also declined by 16.82%. As a result, sales tax fell by 22.36%, causing the net revenue to fall by 6.38%.
Cost of products witnessed a decline of 7.25%, resulting in an increase in gross profits of 7.15%.
Other expenses rose significantly by 413.93%, leading to a fall in operating profit of 40.89%.
Shell’s Earnings per share decreased to Rs 14.98 for the six months that ended in June 2018 as compared to Rs 21.85 a year ago – a decline of 31.44%.
Lower volumetric sales and exchange losses restricted earnings growth. Despite higher product prices, net sales dropped by 3.85% mainly due to lower volumetric sales by 27% to 841k tons versus 1,152k tons in 1HCY17.
This is largely due to a decrease in High Speed Diesel (HSD) sales which fell by 37% to 319k tons in 1HCY18 against 503k tons in 1HFY17 due to better marketing strategies by the competition. Similarly, Mogas sales also went down.
Shell’s script at the bourse was trading at Rs 323, down by Rs 10.29 with a turnover of 52700 shares.
Back in July, Shell announced new state of the art oil tankers for its Haulier fleet at Shell Terminal. With this new addition of 120 lorries, the total number of oil tankers that Shell Pakistan operates has reached 630. The company said that it has plans to add another 100 tankers by December 2018.