Eastern Lubricant profit tumbles on low demand
The state-owned firm declared 40% cash and 10% stock dividend for FY22, which was 140% cash and 20% stock dividend for the previous year
Highlights:
- Eastern Lubricant's profit declined by 78% in fiscal 2021-22
- The net profit of the company stood at Tk1.13 crore, which was Tk5.19 crore in the previous fiscal year
- Its earnings per share dropped to Tk9.50 from Tk52.18 in FY21
- From July to September 2022, the revenue of the company stood at Tk52 lakh, which was Tk4.28 crore in the same period of the previous year
State-owned Eastern Lubricant Blenders witnessed a blow in FY22 owing to zero import of base oil for lower demand from its distributors – Padma Oil, Meghna Petroleum and Jamuna Oil.
As its profit declined by 78% year-on-year, the company declared 40% cash and 10% stock dividend for its shareholders, according to the company's disclosure on the Dhaka Stock Exchange on Tuesday. It paid 140% cash and 20% stock dividend for the previous year.
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Eastern Lubricant usually imports about 3,000 tonnes of base oil every year on demand from the three state-owned distributors. However, it did not import oil in FY22 as the base oil prices were high in the global market.
During the year, the net profit of the company stood at Tk1.13 crore, which was Tk5.19 crore in the previous fiscal year. Its earnings per share dropped to Tk9.50 from Tk52.18 in the previous fiscal year.
The annual general meeting (AGM) of the company has been slated for 4 February 2023 and the record date for 11 December this year.
From July to September 2022, the revenue of the company stood at Tk52 lakh, which was Tk4.28 crore in the same period the previous year. During the period, its net profit was Tk3 lakh, which was Tk16 lakh one year ago.
"We made an impressive profit in FY21 as we could import base oil properly alongside the local procurement. But this year, we could not import base oil owing to the global volatility and the Russia-Ukraine war," Company Secretary Ali Absar said.
"We tried but failed to import that due to a lack of suppliers," he added.
Procuring base oil from the international market, Eastern Lubricant blends the oil and supplies it to the three distributors throughout the year. Since its establishment before independence, it had been a busy blender until the early 2000s when the Bangladesh Petroleum Corporation (BPC) was the sole player in the market.
As soon as the government allowed imports of finished lubricant products in 2001, and permitted private sector players to blend imported base oil at their local facilities in 2002, BPC entities Padma, Meghna and Jamuna Oil began to lose ground in the lubricants market.
As a consequence, Eastern Lubricant's annual blending volume dropped to 1,576 tonnes in FY20 from 21,878 tonnes in FY97, while the decades-old plant has the capacity to blend 24,000 tonnes of lubricant a year. Blending is the process of turning specific graded base oil into finished lubricant products by mixing certain additives.
Historically, a little profit or loss drastically moves the company's earnings per share as its paid-up capital is Tk1.19 crore.
On Tuesday, its shares closed at Tk1,862.80 each on the Dhaka Stock Exchange. As of 30 September, this year, sponsors and directors jointly held 15.04%, Governments 51%, institutions 6.93%, and general investors 27.03% shares of the company.
