Eastern Lubricants’ profit jumps 165% on higher oil imports

Eastern Lubricants Blenders Ltd, a subsidiary of state-owned Bangladesh Petroleum Corporation, posted a 165 per cent year-on-year surge in its net profit in the first half of the current fiscal year.

The increased demand for its on-demand base oil supply also helped the small-cap listed firm make higher revenues in the period on a year-on-year basis.

The company’s profit trajectory heavily depends on the imports of the base oil. Its profits become healthier if it imports base oil. On the other hand, its earnings collapse in the year when it does not import oil.

The trend of the company’s profit which is regulated by its oil imports and subsequent supplies was obtained by reviewing its financial statements in the last four years.

The company posted a profit after tax of Tk 0.25 crore in the first six months of FY20, during which the company did not import any base oil.

In that fiscal, the company’s earnings per share (EPS) was TK 2.60.

Later, in the first six months of FY21, the company imported 104.36 metric tonnes of base oil, helping reach its earnings per share at Tk 5.80.

In the July-December period of FY21, the state-owned company made a net profit of Tk 0.57 crore, while its revenue was Tk 4.34 crore.

The small-cap firm’s profits collapsed again in FY22, as the company did not import any base oil during that year.

As a result, the company’s net profit in FY22 was only Tk 0.29 crore, with earnings per share of Tk 2.96.

The company had a revenue of Tk 4.87 crore in FY22.

The company again imported 312 metric tonnes of base oil in the July-December period of the current fiscal year.

Consequently, the company’s income jumped by 185 per cent to Tk 13.88 crore in the first two quarters of the fiscal year 2022-23 on a year-on-year basis.

Meanwhile, the company’s profit after tax also surged by 165 per cent to Tk 0.77 crore in H1 of the current fiscal year compared to that in the same period last fiscal.

The company also earned revenue from its bitumen supply contract with a road construction project, but it did not help increase profits sufficiently, according to a high official of the company.

Since its establishment before the independence of Bangladesh, Eastern Lubricant had been a busy blender company till the early 2000s, when the Bangladesh Petroleum Corporation (BPC) was the sole player in the market.

The company’s board of directors has been trying to diversify its business since the mid-2010s when it was allowed to im-port on-demand base oil for the Padma, Meghna, and Jamuna Oil companies.

Blending is the process of turning specific graded base oils into finished lubricant products through the mixing of certain additives.

The company gave 140 per cent cash and 20 per cent stock dividends to its shareholders for the year ending in June 2022.

The securities regulator Bangladesh Securities and Exchange Commission (BSEC) ordered 64 small-cap companies, including Eastern Lubricant, to submit plans on how they could increase their paid-up capitals to the minimum of Tk 30 crore each.

Eastern Lubricants’ shares closed at Tk 1,713 per share on the DSE trading floor on Monday.