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Karachi, Shell Pakistan held its corporate analyst briefing for the first nine months of calendar year 2023 (9MCY23), focusing on its robust financial performance and providing updates on the significant sale of a majority stake in the company.
According to JS Research, Shell Pakistan posted earnings per share (EPS) of Rs13.60 for the third quarter of 2023 (3QCY23) and Rs30.14 for 9MCY23. This marks a 125% year-over-year (YoY) growth during 9MCY23, signaling a turnaround from the loss reported from the third quarter of 2022 to the first quarter of 2023. The management attributed this improvement to an increase in end product prices and a waiver of technical fees charged by Shell International. This helped to mitigate the impact of a 20% YoY decline in operating profit and an 87% YoY increase in financial charges during 9MCY23. A noteworthy component of the company’s income was the other income of Rs10.7 billion, primarily due to credit notes issued by the parent company for the waiver of technical and other fees in the second quarter of 2023, accounting for 92% of Shell’s pre-tax profit during 9MCY23.
Furthermore, the company has been engaging in discussions with the Oil and Gas Regulatory Authority (OGRA) regarding the exchange loss mechanism. The management also reported a 28% YoY growth in UC3 margins on lubricants and a 36% YoY increase in convenience retail business sales. Additionally, 14 new General Select stores were added during 9MCY23.
Regarding the sale of its 77.42% stake in Shell Pakistan, the management revealed that Shell Petroleum Co. Ltd (SPCo) has signed a Share Purchase Agreement with Wafi Energy, a company owned by Saudi Arabia’s Asyad Holdings with diversified investments. Wafi Energy will acquire Shell’s operations in Pakistan, including over 600 mobility sites, 10 fuel terminals, a lubricant oil blending plant, and a 26% stake in Pak-Arab Pipeline Company Limited. The transaction is expected to be completed within calendar year 2024, and the management confirmed that the ‘Shell’ brand name and royalty payments to the parent company will continue post-transaction.
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