Eastern Lubricants’ profit dips as demand drops

COMPANY FINANCIALS FOR FY20-

• Profit was Tk53.97 lakh
• EPS stood at Tk5.43
• Declared 30% cash dividend
• Share price fell by 7.7% to Tk80.8 each on Tuesday

State-owned Eastern Lubricants Blenders Limited witnessed a sharp fall in its profit in Fiscal Year 2019-2020.

In the fiscal year, the subsidiary of the Bangladesh Petroleum Corporation saw its profit fall by 77% to Tk53.97 lakh and its earnings per share (EPS) by 81% to Tk5.43–since product demand plummeted during the pandemic.

In Fiscal Year 2018-2019, the company's profit was Tk2.33 crore and its EPS was Tk23.45.

The data shows that Eastern Lubricants has had lackluster profit for the past five years.

It made a profit of: Tk4.14 crore in FY16, Tk4.07 crore in FY17, Tk3.60 crore in FY18, and Tk2.33 crore FY19.

The company's core business is importing base oils and selling them to other state-owned companies – Padma, Meghna and Jamuna.

Though the company's profit and EPS fell in FY20, its profit rose in the first quarter of FY21 in the July to September period.

It had a profit of Tk28.42 lakh in the first quarter of FY21 while its EPS stood at Tk2.86. The profit was Tk11.33 lakh and EPS was Tk1.14 at the same period of FY20.

The company was listed on the stock market in 1976. Its core business is importing base oils, but it also blends lubricating oils and greases, plus sells YUSA brand batteries and bitumen.

In the wake of profit falling, the company recommended paying lower dividends to its shareholders. Its board of directors recommended just a 30% cash dividend, but in FY2018-2019, shareholders got a 100% cash dividend because profit was good.

Ali Absar, company secretary of Eastern Lubricants, said: "The import of base oils is our core business, but no oil was imported in Financial Year 2019-20. As a result, income has gone down."

When asked about the impact of Covid-19 on the business, he said, "Business in the oil sector was bad during the pandemic as there was no demand for it."

Oil sales have been low in the last six months, he said, adding that other businesses like batteries and lubricants are ok.

However, sources said the lubricant blending business has been going through a rough patch for the past decade-and-a-half.

Lubricants have been being imported as finished products since 2001, and as part of market liberalisation, 11 private blending plants were set up in Bangladesh.

At present, the lubricant blending market is approximately 1.80 lakh metric tonnes. Of this, 60% comes from imported lubricant products and 40% is processed locally.

More than 50 companies sell different brands of lube oils.