Punjab Oil Mills Limited (PMOL) has had a rough first half in FY16. It witnessed a drop in its top line for the period and a significant decrease in profit as well. The primary reason for the decline in sales is a combination of lower average selling price; which decreased by 7.4 percent in the first quarter, and volumetric decline.
The main cause of lower prices is a reduction in international prices of edible oil.
Despite lower sales, gross profit margin has improved. This improvement came on the back of larger share of total sales of higher-margin cooking oil products.
On the other hand, lower-margin Banaspati products saw price-base contraction.
According to market sources, PMOL did not aggressively push the sale of Banaspati products during the period because the company was not getting desirable prices.
Punjab Oil Mills followed a similar strategy in 1HFY15 as well.
Low price of palm oil and the global decline in fuel prices have helped the company keep its core cost down.
Even though PMOL has improved its Other Income significantly due to the gain on disposal of assets; this is not enough to prevent a fall in its profit.
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