Chevron Lubricants Lanka has released its audited annual report for 2010, indicating a year-on-year rise in revenue of close to 9% to Rs. 9.5 billion in 2010 compared with Rs. 8.7 billion in 2009. The report further revealed that growth resulted from increased volumes in both the domestic and export markets and rising prices from May onwards.
Additionally stated was that "net profit for the period was Rs 1,501 million compared to Rs. 1,495 million in 2009. Despite the growth in top line the net profit grew marginally due to the sharp increase in Base Oil prices which led to the erosion of gross profit margins from 36% to 32% compared to last year. Operating profit increased from Rs. 2,245 million to Rs. 2,267 million but the profit before tax decreased marginally to Rs. 2,334 from Rs. 2,344 million Year on Year due to the reduction of interest income by 33%."
Also; "Raw material inventory values increased by Rs. 144 million compared to last year as a result of higher acquisition costs. Finished goods inventory values decreased by Rs. 99 million due to aggressive reduction of inventory cover.
Receivables balance increased in line with the increased selling prices but the days sales outstanding remained at 31 days due to tight credit control."
Further, the report alluded to a "sharp" drop in cash and cash equivalents. These more than halved compared to the previous year, which was attributed to "timing of the dividend payments and the increase in income tax payments."
In addition, the report showed that the “short term deposits” line item in cash flows statement was revised downwards by close to Rs. 800 million, and was also affected by a drop in weighted average effective interest rate to 6.49% in 2010 from 8.22% in 2009.
Meanwhile, according to the company's Chief Executive and Managing Director, Kishu Gomes, who was quoted in the report; Chevron's "satisfactory" 2010 performance was as a result of a several factors, including "constant innovation and strategic alignment post war opening up of new markets, an increase in vehicle population due to a fall in duties for vehicle imports."
He also indicated that "positive growth was seen in the industry whereas prior to 2010, the market declined for two consecutive years" and "base oil prices increased sharply and the average cost per tonne increased by 16% compared to last year which impacted gross margins." Noting the occurrence of “re-structuring to improve organisational efficiency," he also revealed that there were "severance costs of Rs. 33 million."
Additionally, Mr. Gomes highlighted that "export volumes to Maldives and Bangladesh have increased significantly (24% and 61% respectively) through greater penetration into new customer and product segments assisted by the global economic recovery."
Elaborating, he commented "growth in the Maldives is attributed mainly to the recovery of the tourism industry as well as growth in the fisheries, sea transportation and power generation on the resort islands. In Bangladesh, Chevron was successful in penetrating the power generation sector."
Touching upon 20011, Mr. Gomes added: "Chevron will focus on improving margin share rather than market share by promoting high margin products both locally and in our export markets."
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