Sri Lanka’s Chevron unit reports 13% profit fall in September

Profits of Sri Lanka’s Chevron Lubricants unit fell by 13% to Rs521 million (US$420 million) in the September 2012 quarter from a year earlier. The decline was attributed to poor market sentiment and a price hike brought about by currency depreciation. However, revenue grew marginally by 2.9% to Rs3.0 billion (US$23 million) from a year earlier. Cost of sales remained flat at Rs2.0 billion rupees (US$15.2 million) and the company’s gross profits fell by 8.6% to Rs929 million (US$7 million).
The company posted earnings of Rs4.35 (US$0.03) per share for the quarter. It also reported earnings of Rs14.30 (US$0.11) per share for the first nine months of the year, on total profits of Rs1.71 billion (US$13 million). “The top line was affected due to the lower market consumption while the gross margins were affected by the depreciation of the rupee against US dollar,” Kishu Gomes, the company’s chief executive told shareholders in a report filed with the Colombo Stock Exchange. Gomes explained that “consumption fell with a steep duty increase in vehicles, a fall in the currency and a price rise to cover higher costs of raw materials.”
Sri Lanka’s rupee fell from Rs110 to Rs134 to the US dollar over the past year because the government took tens of billions of rupees in loans to manage rising energy prices. These loans were accommodated with central bank credit or printed money. Energy prices and interest rates were allowed to soar in February 2012, and through a float of the exchange rate, the exchange rate was allowed to adjust to the underlying monetary policy. But Gomes asserted that raw material prices and the exchange rate were stabilizing and the market is expected to exhibit positive growth by the end of the year. (October 30, 2012)