LAUGFS Gas PLC recorded a healthy growth of 49 percent in turnover for the first half of the year 2017/18 driven by the group’s long and medium term strategic growth drivers.
The group’s Operating Profits is down by 14 percent and Profit After Tax (PAT) was down by 85 percent in comparison to the corresponding period of the previous year.
This is mainly attributed 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 has also impacted the profitability quite significantly. While International prices of Liquefied Petroleum Gas have 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 and shareholder value of the group and the company has already made representations to the relevant authorities to rectify the situation with a long term sustainable solution.
“In spite of the modest results of this quarter, we remain positive about our future outlook. We are focusing on aggressive yet strategically well placed investments for LAUGFS Gas PLC which will enable us to strengthen our regional presence further in the power and energy sector.
With a single-minded focus on ‘Investing for growth’, we have identified emerging market trends with tremendous growth prospects that will yield long-term returns in safeguarding our stakeholder interests,” said, LAUGFS Gas PLC Chairman, W. K. H. Wegapitiya.
Apart from being the first and the largest investment in the Hambantota port, this terminal will be one of the largest LPG import and export terminals in its class in South Asia in terms of storage capacity as well as the most strategic in terms of its location with access to serve a population of around half a billion within neighbouring countries. Value generation from the LPG Import & Export Terminal is expected from the second half of the year 2018.
With LAUGFS becoming Sri Lanka’s first energy brand to become a multinational with the acquisition of Petredec Elpiji Ltd and setting up of LAUGFS Gas (Bangladesh) in 2015, the company is all set to receive the returns of its investments in one of the most lucrative emerging markets for LPG in Asia. In the backdrop of the government support to popularize LPG in Bangladesh as an energy alternative with the rapid exhaustion of natural gas reserves, the market potential for growth in Bangladesh remains very promising. In January 2017, LAUGFS Maritime purchased their third LPG vessel ‘Gas Courage’ which now operates under the Sri Lankan flag. This strategic step strengthened the company’s LPG fleet to support the fast expansion of LAUGFS’s LPG downstream activities in Sri Lanka and Bangladesh and to cater to the growing demand for LPG across the region.
In line with its visionary and global approach to sustainability and business growth, LAUGFS has been continuously focusing on sustainable energy solutions. LAUGFS’ investment in solar power generation aims to capitalize on this global trend in terms of business growth while contributing to the Government's efforts to increase the contribution of renewable energy by 20 percent to the total energy requirement in the country by 2020.
“We hope that the relevant authorities will take this into account and introduce a pricing formula linked to the world market price trends. Nevertheless, we are confident that our strategic direction and the timely investments will steer us towards vigorous growth within the planned timeline,” commented LAUGFS Gas PLC Group Managing Director, Thilak De Silva.
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