Shell shocked as it reports Rs1.4b half-year loss

Cites rupee depreciation, crude price surge as reasons

KARACHI: Shell Pakistan recorded a loss of over Rs1.44 billion in the half year ended June 30, 2019 on the back of a significant depreciation of the rupee against the US dollar and surge in crude oil prices in world markets, which took its cost of doing business to sharply higher levels, according to a company notification issued to Pakistan Stock Exchange (PSX) on Wednesday.

The Dutch oil marketing firm had recorded a profit of Rs1.60 billion in the same period of last year. Loss per share of the company came in at Rs13.53 for Jan-Jun 2019 compared to earnings per share of Rs14.98 in the corresponding period of previous year. During the day, Shell’s share price dropped Rs4.60, or 2.93%, to Rs152.27 with trading in 19,800 shares at the PSX.

Net sales of the firm surged 12.5% to Rs101.14 billion compared to Rs89.9 billion last year. The growth in sales, however, failed to translate into profit due to a notable increase in the cost of sales and finance and administrative costs. “Its (Shell’s) overall financial results were impacted by some of the macro-economic challenges being faced by the country, primarily due to another unprecedented devaluation of the rupee and volatility in international oil prices,” the company said in a statement released to the media.

“Being part of an import-dependent industry where a large percentage of costs and payables is denominated in foreign currency, this devaluation had an impact on the cost base and, in turn, on the financial performance,” the statement stated.

Cost of sales surged 13.61% to Rs92.72 billion compared to Rs81.61 billion last year, according to the company’s profit and loss accounts. Other expenses increased to Rs3.24 billion compared to Rs1.89 billion last year. Alone in the second quarter ended June 30, 2019, the firm booked a loss of Rs1.7 billion compared to a profit of Rs247 million in the same period of last year.

Published in The Express Tribune, August 22^nd, 2019.

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