KARACHI: The profit after tax of Shell Pakistan Limited has increased to Rs 758.401 million in the quarter ended March 31, 2011 as compared to Rs 402.037 million earned in the corresponding period in 2010. The company’s earning per share increased to Rs 11.07 in the period under review against Rs 5.87 in the same period last year.”The improvement in profitability is mainly on the back of improved performance in the export business of the company, reduction of operating costs and favourable movements in the international price of oil during this quarter”, Chairma, Shell Pakistan Limited, Zaiviji Ismail bin Abdullah, in his review on company’s quarterly report said.However, there continue to remain significant challenges for the company due to low regulated margins and continued delay in recovery of government refunds of indirect taxes and Price Differential Claims, he added. He said margins for petrol and diesel are one of the lowest in the region, having been continuously reduced by the government over the recent periods at a time when oil prices and all costs have been on the increase.
In a high oil price and inflationary environment that is prevalent today, the current level of margins for local sales do not provide appropriate returns to cover the cost of operations and particularly the high cost of investment in the required stocks and assets. This is not a sustainable situation for the company and needs to urgently be addressed by the government.In edition, he said, the government receivables are now approaching in excess of Rs 6 billion and is causing a continually high financing charge on the company. Since the inception of these receivables over the last few years, the delays in settlement have already cost the company over Rs 3 billion in interest costs. The company’s management is vigorously following up with concerned government authorities for the early settlement of these. “We strongly believe it is imperative for the government to urgently address the unfavourable impacts of reduction in oil marketing company’s margins and delays in settlement of government receivables and are hopeful that the government will act quickly to create an environment conducive to business continuity and growth in this key sector of the economy”, he said.
According to the financial results sent to Karachi Stock Exchange (KSE), the company’s sales increased to Rs 65.622 billion in this quarter against Rs 48.505 billion in the same period last year while the other revenue also increased to Rs 115.706 million against Rs 105.093 million.The company paid Rs 7.146 billion as sales tax in this quarter against Rs 5.759 million paid in the same account in the same period a year back while the cost of products sold increased to Rs 54.799 billion against Rs 40.362 billion. The company’s distribution and marketing expenses increased to Rs 1,173.232 million against Rs 681.083 million while administrative expenses reduced to Rs 891.925 million from Rs 1,064.341 million. The company’s profit before taxation increased to Rs 1,277.023 million in this quarter against Rs 747.038 million in the same quarter last year. – Brecorder