Shell Pakistan Limited announced first-quarter financial results ending 31 March 2020.
The company suffered a massive Rs. 4.33 billion loss after tax compared to an Rs. 256.89 million profit at the same time last year. Sales of Shell landed at Rs. 41.90 billion, translating into a decline of 8.07 percent compared to Rs. 45.58 billion reported in the corresponding period last year.
The sharp decline in oil prices resulted in exceptionally high inventory losses during the first quarter of 2020, which in turn impacted financial performance considerably. Pakistani Rupee’s devaluation against the US dollar by another 7 percent and its implications were felt in the company’s overall performance.
Sales costs were registered at Rs. 41.16 billion, up 3.06 percent in the same quarter in 2019 compared to Rs. 42.46 billion. That took Rs. 745,81 million from the gross profit. Down by 76.12 percent compared to last year’s Rs. 3.12 billion.
The quarter was struck hard by the effects of the global coronavirus pandemic. The pandemic led to a global economic downturn leading to a sharp decline in crude oil prices from $66/barrel in January 2020 to $22/barrel in March 2020, dropping by more than 60 percent, mainly due to a drop in global demand for oil. The oil industry felt the effect of this instability on the oil prices, and Shell Pakistan was also affected.
The organization has maintained sufficient commodity inventories in accordance with the standards of compliance.
The oil industry also felt the impact of Pakistan’s shrinking fuel demand due to the government ‘s national lockdown measures including the country-wide closure of non-essential companies, factories, and public transportation.
As a result, Pakistan’s oil marketing companies experienced a decrease in oil consumption as Pakistan’s engine gasoline volumes fell by 10 percent while high-speed diesel volumes fell by 29 percent compared to the same quarter last year. This rising volume trend also had an impact on Shell Pakistan and had a major effect on its financial results.
Shell’s other expenses increased to Rs. 1.66 billion, up by a massive 317.5 percent compared with Rs. 400 million recorded last year in the same period. Administrative expenditures saw a 71.50 percent rise to Rs. 1.31 billion compared to Rs. 764 million in the same timeframe of the previous year. Distribution and spending rose from Rs. 1.60 billion to Rs. 1.74 billion.
Other revenue squeezed at Rs. 72 million, down 75 percent from Rs. 279 million in the same period last year. With borrowing costs rising to Rs. 432 million by 31 percent compared to Rs. 330 million last year.
During the first quarter of 2020, Shell Pakistan reported a loss per share of 40.49 Rs. In the same period last year, it had reported revenues per share of Rs. 2.40.