Engen�s profits down as oil prices crash
Isaac Pinielo | Wednesday April 1, 2015 10:42
According to the group’s audited results for the year ended 31 December 2014, the company’s gross profit decreased by 26.9 percent from P247.4 million in 2013 to P180.9 million in 2014, mainly due to the decline in international crude oil prices.
International crude oil prices dropped from levels of over $100 per barrel at the beginning of 2014, to just under $50 per barrel by early January this year. Foreign exchange gains also decreased from P9.7 million at the end of 2013, to P1.4 million at the end of 2014 due to the depreciation of the Pula against the South African Rand.
Overall, the company’s performance reflects a 49.9 percent decrease in net profit after tax from P130.2 million in 2013 to P65.2 million at the end of 2014.
Revenue decreased marginally from P2.62 billion at the end of 2013, to P2.60 billion at the end of 2014, which represents a 0.8 percent decrease. Total sales volumes grew by 0.5 percent between 2013 and 2014. While retail sales grew by 4 percent, commercial sales declined by 4 percent due to the completion of some infrastructure development projects that the group was supplying fuel to, and supply constraints on liquefied petroleum gas (LPG) during an unplanned shut down of the company’s affiliate refinery in Durban. The company revealed that fuel supplies into Botswana continued to be stable with the addition of one more supply source from within South Africa.
Commenting on the results, Engen Botswana managing director, Chimweta Monga said the unplanned shutdown at their affiliate refinery was well managed by imports substituting refinery production on all products with the exception of liquefied petroleum gas, which was in short supply for a period of three months during the refinery shut down period. He further said they remain optimistic about the operating environment and continue to espouse their long-term strategic intent to grow the Engen brand in the domestic market and maintain their position as one of the leading petroleum companies in the market.
Monga also stated that the group commenced the construction of four new retail outlets with one of the outlets streaming in December 2014. It is expected that the remaining three will stream in the first quarter of 2015.
While competition in the retail channel across the industry increased with several new outlets being commissioned, Monga said the group managed to grow retail sales by 4 percent in the year under review. “Retail remains the cornerstone of our business in Botswana thus adequate focus will be applied to ensure sustainable growth in this important market segment,” he said.