LIOC pulls off a solid performance in March on lower oil prices

Lanka IOC (LIOC) swung to a profit during the three months ended March 31, 2019 (4Q19) as the local unit of the Indian downstream oil behemoth managed to survive a financial year marked by multiple headwinds.

The company reported earnings of Rs.1.76 a share or Rs.937.1 million for the January-march quarter, compared to a loss of Rs.91.9 million reported for the corresponding period in the previous year.

The March quarter earnings were a watershed for the company saddled with heavy losses until the end of December, last year, where the company incurred Rs.986.9 million in net losses.

The March earnings helped the company to erase its losses built up through December to end the financial year with earning of Rs.404.4 million, compared to Rs.755.6 million loss reported for the previous financial year ended March 31, 2018.

LIOC offers a classic case of how the fortunes of a downstream oil industry player could change due to the changes in the futures market prices.

Oil prices in the Brent futures—the global benchmark—came down from US $ 84.98 a barrel to US $ 50.47 by December 24, 2018 and have since picked up gradually towards US $ 70 a barrel today.

During the quarter under review, the company earned revenues of Rs.18.5 billion, compared to Rs.23.8 billion in the similar period in 2018.

The cost of sales came down 27.7 percent to Rs.17.2 billion from a year ago.

Meanwhile, for the year ended March 31, 2019, the company earned revenues of Rs.86.3 billion, down 5.5 percent from a year ago.

The cost of sales was down to Rs.82.8 billion, from Rs.89.5 billion.

Sri Lanka implemented a pricing formula for fuel but has left that on hold since last February largely due to the growing unpopularity of the government in power.

Indian Oil Corporation Limited, India owns a 75.12 percent stake in Lanka IOC PLC.