OMC's sales rise 19 percent in July-December

The overall sales volume of oil marketing companies (OMC) in the country for the first half of FY07 (July-December 2006) rose by 19 percent to 8,521,000 tons compared to 7,185,000 tons recorded during the corresponding period of last year.
As has been the case since the start of the year, the product contributing to bulk of the growth was fuel oil. Sales of this black oil product surged by a massive 78 percent on year-on-year basis to 3,440,000 tons as against 1,933,000 tons registered previously. On the other hand, all white-oil products depicted a declining trend. Sales of JP-1, MoGas, HSD and Kerosene fell by a respective 10 percent, 5 percent, 3 percent and 3 percent to 517,000 tons, 582,000 tons, 3,587,000 tons and 107,000 tons.
Jawad Haleem, an analyst at Atlas Capital Market said that a company wise comparison shows that PSO not only contributed the most in overall sales volume due to its sheer size, it also recorded the highest growth of 30 percent in sales during the period under review to 5,540,000 tons up from 4,255,000 tons dispatched last year. As a result, its market share improved from 59 percent in first half of FY06, to 65 percent this year, up 6pps.
At the same time sales of APL rose by 18 percent to 623,000 tons as against 530,000 tons last year. Its market share, however, remained flat at 7 percent.
Shell's performance remained lacklustre as its sales fell by 15 percent to 1,217,000 tons from 1,430,000 tons sold during the half-year period July - December 2005 with its market share declining by 6pps.
Going by the past trend alone, full year sales for the year FY07 are projected to touch 17 million tons, up 9 percent from 15.6 million tons registered during FY06. OMC's underwent a major decline in profitability and even a loss was witnessed by Shell due to inventory losses following the sharp plunge in international oil prices. The higher sales volumes can, to some extent, mitigate the squeeze in earnings, but are not expected to be enough to post a growth in profitability over last year (which stood at a record high) for at least PSO and Shell. APL may escape a growth in earnings due to its low base effect. The adjustment in pricing mechanism in March 2006 coupled with the reduction in gasoline and diesel retail prices in Ogra's last meeting is to make the situation worse.