The profit after tax of Shell Pakistan Limited has declined to Rs 1.615 billion in the year ended December 31, 2010 as compared to Rs 2.562 billion earned in the corresponding period in 2009. The company's earning per share declined to Rs 23.59 in the period under review against Rs 37.42 in the same period a year back. The board of directors of the company in its meeting held on Thursday recommended a final cash dividend at Rs 8.00 per share ie 80 percent.
This is in addition to the interim dividend of Rs 4.00 per share ie 40 percent declared in August 2010, making a total of Rs 12.00 per share ie 120 percent for the year ended December 31, 2010. According to the financial results sent to Karachi Stock Exchange (KSE), the company's sales increased to Rs 223.813 billion in 2010 against Rs 177.110 billion in the same period in 2009. The company paid Rs 26.690 billion as sales tax in 2010 against Rs 21.619 billion paid in the same account a year back. The company's cost of products sold increased to Rs 185.403 billion against Rs 143.097 billion.
The distribution and marketing expenses also increased to Rs 4.524 billion against Rs 3.376 billion while administrative expenses reduced to Rs 3.679 billion against Rs 3.846 billion. The company's profit before taxation stood at Rs 3.044 billion in 2010 against Rs 3.910 billion in 2009.
The company's directors' review report said that the year 2010 has been an exceptionally demanding period for the company and the oil industry in general. "The profitability for this year was adversely affected due to a significant reduction in margins of our regulated and some non-regulated products, lower than expected GDP growth impacting the total market, a higher financing costs due to a continuing delay in the receipt of monies owed to us by the government and rising inflation", it added.
"One of the toughest challenges the company faces is the continued delay in recovery of government receivables which currently stand at more than Rs 9 billion. These relate to Price Differential Claims and Sales Tax/Petroleum Development Levy refunds and the delay in putting an immense burden on our borrowing costs".
"We strongly believe it is imperative for the government to urgently address the unfavourable impacts of reduction in Oil Marketing Company's margins and delays in settlement of government receivables and are hopeful that the government will act quickly to create an environment conducive to long-term business continuity and growth in this key sector of the economy".
"We are hopeful that going forward, as the country moves into the next phase of economic rehabilitation, we will be able to participate in increased demand for oil products in a more favourable economic environment, leading to improved performance in the coming years", the report said. On an ongoing basis the company will continue to avail opportunities in growing the business", it added.