ISLAMABAD: Shell Pakistan Limited’s Board of Directors (‘SPL’) announced the first quarter results for the company on May 20. The company posted a loss after tax of PKR 4,332 million compared to PKR’s profit of 257 million made in the same period last year.
This quarter has been severely affected by the impact of the unprecedented coronavirus pandemic. The pandemic led to a downturn in the global economy that caused crude oil prices to fall sharply from $ 66 / barrel in January 2020 to $ 22 / barrel in March 2020, down more than 60 percent, mainly due to falling global oil demand. The oil industry is feeling the effects of oil price instability which also affects the SPL.
SPL maintains adequate product stock in accordance with compliance requirements. This sharp decline in oil prices resulted in very high inventory losses during the first quarter of 2020 which in turn had a significant impact on financial performance.
The oil industry is also feeling the effects of the decline in the fuel market in Pakistan due to the national locking measures imposed by the Government including closure across the country for business, factories and public transportation which are not essential. As a result, OMC in Pakistan experienced a reduction in oil consumption because the volume of Pakistan’s Gasoline Motor fell by 10% while the volume of High Speed Diesel dropped 29% compared to the same quarter last year. This downward trend in volume also has an impact on the SST and has a significant impact on its financial performance.
Rupee Pak devalued against the US dollar by a further 7%, and the effect was felt in the company’s overall results.
SPL focuses on encouraging credible, competitive and affordable business plans that deliver top quartile business performance and play a key role in developing Pakistan’s energy future.
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