The profit of the listed oil marketing companies (OMCs) has marked phenomenal growth of 431 percent to Rs 4.78 billion in the first quarter of FY08 ended on September 30 as compared to Rs 0.90 billion in the corresponding period of last year.
The volumetric growth of POL products mainly triggered by furnace oil (FO) and Mogas of the listed OMCs followed by 14.6 percent rise in the sector's topline on year-on-year basis.
"There have been a number of driving factors behind this huge growth, including substantial inventory gains of Rs 1.25 billion due to 15 percent quarterly rise in oil prices in the international market against inventory losses of Rs 1.95 billion last year, owing to 16 percent decline in the oil prices in the international market in the first quarter of FY07", an analyst at Invest Capital & Securities said.
"Therefore, the inventory losses of first quarter FY07 resulted in low profitability base-effect, resulting in pronounced growth during the same period of FY08, he added. Net inventory gains were estimated at Rs 993 million, Rs 190 million and Rs 71 million for PSO, Shell and APL respectively for the first quarter of FY08. POL products' sale grew by seven percent on year-on-year basis while 8.4 percent for the entire sector, coupled with increased sales of high-margin products like lubes, naphtha and CNG. Resultantly, gross margins jumped by 3.45ppt to 6.11 percent in the first quarter of FY08.
Relatively tiny rise in financial charges of 1.3 percent on year-on-year amid some recovery in PDCs and decline in financing rates to further support bottomline (net margins increased by 2.56ppt) in the first quarter of FY08. "The profitability of listed OMCs is expected to further strengthen in the second quarter of FY08 and we expect 50 percent year-on-year earnings growth by the end of FY08", he added.
Comments
Comments are closed.