Chevron Lanka Lubricants (CLL) showed improved results on the back of the drop in oil prices and improvement in efficiency during the last quarter, but replicating this performance in the current quarter seems doubtful, stock analysts said.
“At cost of sales level the company’s efficiency has posted good results,” Deshan Pushparajah, Assistant Manager Corporate Finance, Capital Alliance told the Business Times. Cost of sales fell 11% to Rs 1.56 billion from Rs 1.73 billion with distribution costs increasing up slightly to Rs 110 million Rs 103 million.
However Mr. Pushparajah noted that the oil prices have shot up to above US$80 a barrel since of late and that it might go up further in the next few months with the global economic recovery.
“This will feed directly into their cost of sales increasing it greatly, so the possibility of Chevron replicating this performance in future years is doubtful,” he said.
The company’s profits rose 61% to Rs 372.9 million in the March 2010 quarter as revenues rose just 1 % to Rs 2.29 billion from Rs 2.27 billion a year earlier.
CLL is the leader in the Sri Lankan lubricant market with a premium market share of 75%-80% deals in blending, importing, distributing and marketing of lubricant oils and greases. The company caters to both retail and industrial markets of which highest revenue is stemmed from the retail segment. |
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