Shell Pakistan Limited (PSX: SPL) announced its 1HCY17 financial performance yesterday along with Rs7 per share dividend. While the firm took a leap in earnings for 1QCY17 with profit after tax shooting up by over 60 times, the 2QCY17 earnings were significantly down by 57 percent year-on-year. Overall, 1HCY17 earning growth remained positive at six percent year-on-year.

The primary factor behind the decline in 2QCY17 earnings was the topline; Shell Pakistan’s net revenues depicted a decline of one percent in the second quarter, while the cost of sales increased by 2 percent, year-on-year. The Chief Executive’s review highlights that the continued oil price volatility and compliance to regulatory requirements of maintaining strategic stock levels in the country exposes the company to inventory losses.

The Chief Executive’s review also highlights that firm continues to be burdened by the overdue receivables from the government of Pakistan, which results in rising finance cost. Total outstanding receivables stood at Rs4,414 million on June 30, 2017.

It must be noted that while the latest quarter depicts a decline in the bottomline, Shell Pakistan has been able to turn things around significantly as it has trotted upwards from a loss of over a billion rupees in CY14 to a positive bottomline of over Rs6.7 billion in CY16, which has been due to its retail and operations endeavours. Its earnings for CY16 were higher than the firm’s annual earnings in at least the last ten years.

In times of rising petrol consumption, Shell Pakistan has introduced Shell V Power – premium gasoline, and Shell Advance Ultra – top tier lubricant for motorcycles. Any revision in OMC and dealer margins of petrol and diesel, and the deregulation of diesel prices would be a boost for the oil company.