Sri Lanka’s Laugfs Gas group returned to profit in the September 2017 quarter with net earnings of Rs40 million, down 85% from a year ago, after three successive quarters of losses.
Earnings per share of the liquefied petroleum gas distributor fell to 10 cents from 70 cents, according to interim accounts filed with the stock exchange. The share was last traded at Rs23.
Laugfs Gas group chairman and chief executive W. K. H. Wegapitiya attributed the lower profit to price controls, rupee depreciation and rising interest costs and said the company continued to lobby for a pricing formula.
Group sales rose 49% to Rs6.4 billion in the September 2017 quarter from the year before. Finance costs rose 77% to Rs566 million, the accounts showed.
In the six months to September 2017 Laugfs Gas reported a loss per share of Rs1.07 compared with an EPS of 76 cents the year before.
Wegapitiya said attributed the lower profit to “a combination of market factors, mainly the rapid increase in global Liquefied Petroleum Gas prices, and upward trajectory of world steel prices.
“Further, the depreciation of the value of rupee against the US dollar as well as the rising interest rates have also impacted the profitability quite significantly,” he said.
“While International prices of Liquefied Petroleum Gas has been rising sharply since October 2016, domestic gas prices, which are regulated in the country, have not been adjusted accordingly in the absence of a pricing formula.
“This has significantly eroded the short term profitability of the group and the company has already made representations to the relevant authorities to rectify the situation with a long term sustainable solution,” Wegapitiya said.
The remains focussed on “aggressive yet strategically well placed investments . . . which will enable us to strengthen our regional presence further in the power and energy sector,” he said.