Turnaround: after loss-making 2022, Shell Pakistan posts Rs6.2bn profit in 2023

Shell Pakistan Limited (SPL), a subsidiary of Shell Petroleum Company Limited, registered profit-after-tax of Rs6.21 billion in 2023 in stark contrast to a loss of Rs82.31 million in 2022.

The profitability of the oil marketing company (OMC) comes on the back of a massive increase in its other income.

According to a notice to the Pakistan Stock Exchange (PSX) on Wednesday, the board of directors met on March 06 to review the company’s financial and operational performance and announced a nil final cash dividend.

The interim cash dividend for the nine months ended September 30, 2023, stood at Rs5 per share.

Earnings per share (EPS) were recorded at Rs27.34 in 2023 as opposed to a loss per share of Re0.34 in the same period last year (SPLY).

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Net revenue rose to Rs431.65 billion compared to Rs412.69 billion in SPLY, an increase of nearly 5%.

However, the company’s gross profit declined by over 8%, clocking in at Rs30.77 billion in 2023, compared to Rs33.59 billion in SPLY.

The decrease is attributed to an increase in the cost of products sold, which increased 6% from Rs379.11 billion in 2022 to Rs400.88 billion in 2023.

On the other hand, the OMC’s ‘other income’ saw an exponential growth of 666%, clocking in at Rs9.03 billion in 2023, compared to Rs3.27 billion in SPLY.

Consequently, Shell Pakistan’s posted an operating profit of Rs9.03 billion in 2023, as compared to a loss of Rs3.27 billion in SPLY.

During the period, Shell’s cost of finance increased to Rs2.5 billion in 2023, as compared to Rs1.36 billion in same period last year, a jump of over 84%. The higher finance cost during the period could be attributed to the rise in interest rate during the period.

Last year in July, Shell Pakistan announced that its parent company had notified its intent to sell its shareholding in SPL.