Sri Lanka’s Laugfs in the red as LPG costs soar amid price controls
ECONOMYNEXT – Sri Lanka’s Laugfs said it lost Rs185 million in the December 2016 quarter against a profit of Rs293 million a year earlier, as liquefied gas prices soared and it was seeking a price hike from authorities.
The group, which also has interests in tourism, reported losses of 46 cents per share. In the nine months to December, it reported earnings of 28 cents per share on total profits of Rs120 million.
However, finance costs also rose to Rs403 million from Rs186 million.
"Significant increases in LPG prices in the world market have had a substantial negative impact on our bottomline compared to the corresponding period last year," Laugfs Chairman W K H Wagapitiya told shareholders.
"However, in order to effectively counteract the impacts of these global trends, we have already engaged with the relevant stakeholders for a realignment of prices. While some of our long-term investments have also had a significant negative impact on our financial results, we remain positive and confident of the long-term returns these will yield."
Sri Lanka had a price formula for LGP during the last administration, which protected distributors, the rupee and the credit system by matching domestic demand with imports.
However, the current administration had mandated a series of price reductions outside the formula.
Over the last quarter, both propane and butane prices, which make up LPG, have soared.
The price of $295 a metric tonne in September 2016 had soared to $510 by February 2017. Butane had shot up from $320 a tonne to $600 in the same period.
Crude prices have also recovered from unusually low prices in the first quarter of 2016. (Colombo/Feb17/2017)