Shell’s profit clocks in at Rs534 million during Jan-June

Earnings up 486% in Apr-June on the back of higher sales

KARACHI: Shell Pakistan saw a 486% year-on-year jump in net profit for April-June 2015 quarter on the back of what CEO Omar Sheikh says is a result of tremendous growth in sale of petrol and diesel.

The company on Wednesday announced that it had recorded Rs1.28 billion profit during the quarter that ended on June 30 compared to the same period of last year.

However, six-month (January-June) earnings came to around Rs534 million as losses were incurred in the first quarter of the year.

Some of the rise in profitability could also be attributed to inventory gains, which reflect appreciation in the value of petroleum products in storage tanks after government revised the retail price.

But it was largely the result of a 32% increase in off-take of petrol that petroleum marketing industry saw as a consequence of low price and rising demand, Sheikh said on the sidelines of a ceremony held to mark a new engine oil-change mechanism.

“Shell has witnessed an increased preference of consumers because against the overall 32% rise in sale of petrol, our sales were up by 47%,” he said, attributing the growth to the sale of automobiles.

Along with diesel, the company’s sales of auto fuels jumped 37% in the quarter. Its market share in petrol rose 1.67% to 21.3% while for diesel it increased 0.3% to 15-16%.

“The important thing for us is that consumers prefer us over our competitors. Keeping that in mind we plan to invest on our forecourts (petrol pumps),” Sheikh said.

Going forward, the company would open up 100 Select stores - a general store situated on the petrol pump’s premise. However, no timeline has been given for the investment.

Taking on lubricants

While Shell Pakistan leads the lucrative lubricant oil market with a share of 20%, it has decided to revamp several of its 786 outlets and equip them with facilities like the one inaugurated on Wednesday in Karachi’s DHA.

The system uses a set of mechanical and electronic devises to change engine oil quickly and efficiently.

“The idea is to make our forecourts one-stop shops for cars where customers can have usual service in addition to facilities like a store, ATM machine and McDonald’s,” he said. “Unlike petrol and diesel, the price of engine oil is not regulated.”

Published in The Express Tribune, August 20^th,  2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.