KARACHI: Shell Pakistan’s profits dropped 44% to Rs906 million in 2011 on the back of swelling receivables that have restricted cash available with the oil marketing company.
Outstanding government receivables continue to be the toughest challenge, Shell Chairman Sarim Sheikh wrote in a post-result review sent to the Karachi Stock Exchange on Wednesday.
The second largest oil marketing company’s receivables from the government stand at Rs13.8 billion on account of price differential claims, sales tax and petroleum development levy refunds. The company’s managed to recover a meagre amount of Rs1.2 billion in 2011.
An immediate settlement of these dues is our top priority, added Sheikh
Sales grew by 11% to astounding Rs247.5 billion in the year ended December 31 but this did not help the firm’s bottom-line as profit margins declined.
This was a year of trying circumstances due to high inflation, rising oil cost, heightened security concerns and growing cost of doing business, further said Sheikh.
Financial costs almost doubled to Rs2.1 billion in 2011 against Rs1.26 billion in 2010.
Moreover, the cost of sale also rose 12% to Rs206.7 billion during the period under review.
The company did declare bonus shares in the proportion of one share for every four shares along with the result and spurred a rally at the stock market. The company’s stock surged Rs8.08 to close at Rs201.39 despite the overall KSE’s benchmark 100-share index declining 79.39 points.
The same trend has been witnessed across the industry as Pakistan State Oil posted a massive drop of 36% in net profit during July to December 2011 and failed to declare a dividend.
On a surprising note, distribution and marketing expenses declined by 8.46% to Rs4.14 billion in 2011 against from Rs4.52 billion in 2011. Administrative expenses also registered a decrease of 5.65% to Rs3.47 billion in 2011.
Published in The Express Tribune, March 8th, 2012.
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All the chest thumping in the World can't hide the fact that Pakistan is essentially bankrupt - If you can't pay Shell for it's fuel how on earth are you going to pay Ian for it's fuel?