Shell Pakistan Limited has revealed its financial performance report for the first half of 2019, which shows a loss of Rs.1.44 billion mainly due to the devaluation of rupee against the US dollar.
According to the details, the company had earned a profit of Rs.1.60 billion in the same period during the last year, which depicts the current deteriorating economic situation in the country. In only the second quarter of 2019, Shell Pakistan suffered a loss of Rs.1.70 million as compared to a profit of Rs.247 million in the same period last year. Overall, the net sales of the company increased to Rs.101.14 billion in comparison to Rs.89.90 billion last year, thus showing a growth of 12.50%. However, the cost of sales also went up by 13.61% to Rs.8.41 billion, which dented the overall financial performance of the company to a great extent. It is pertinent to mention here that these stats indicate financial performance until June 30, 2019.
The depreciation of Pakistani rupee against the US dollar has been the primary cause of such a huge loss as a large proportion of costs and payables are denominated in the foreign currency. Our currency has recorded a massive depreciation during the last year or so which has created a panic situation in the industry. The uncertainty currently prevailing in the auto and oil industry of Pakistan has disturbed the overall face of business in the country. Although Shell Pakistan Limited strengthened its market share in such a challenging environment yet it failed to recover from such a huge financial loss. The country is facing macro-economic challenges which are turning quite disastrous for the overall sector. The volatility in international oil prices hasn’t helped the cause either.
Furthermore, a considerable increase in the policy rate of the State Bank of Pakistan (SBP) affected the overall financial status of the company. The revised rates of their monetary policy currently stand at 13.25%. Shell Pakistan also had several overdue receivables from the Government of Pakistan which adversely affected the company’s profits. The earnings were further dented by an almost 7 times increase in the finance cost which comprises of bank charges and mark-up on short-term borrowings. In the first half of 2019, it was recorded as Rs.726.84 million as compared to Rs.93.24 million during the same period in the previous year. The complete statistics of profit and loss of Shell Pakistan are given in the table below:
According to the stats shared by the company, it suffered a loss per share of Rs.13.53 as compared to the first half of 2018 in which it posted earnings per share of Rs.14.98. The company’s script at the Pakistan Stock Exchange (PSX) also decreased by Rs.4.60 and closed at Rs.152.27 on August 21, 2019. The turnover was recorded at 19,800 shares in the stock market.
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