(MENAFN- Muscat Daily) Muscat- Profits at Oman's oil marketing companies have taken a hit in the first quarter of this year, with margins being squeezed due to the revised margin structure of oil retailers and weaker retail demand for fuel products.
All three oil marketing companies – Shell Oman Marketing Co, Oman Oil Marketing Co and Al Maha Petroleum Products Marketing Co – posted declines in first quarter profits despite sales revenues growing significantly due to increase in fuel prices.
Shell Oman reported a 17.6 per cent drop in its net profit for January – March period of 2018 at RO2.51mn compared to RO3.05mn net profit reported for the same period of last year.
'This was mainly attributed to the revised margin structure for the new supply point at Al Jiffnain, and the decline in retail volumes due to changing market demand patterns', Shell Oman said in its directors report released to the Muscat Securities Market (MSM).
The company's gross revenue, however, rose 11.9 per cent to RO123.43mn for the first quarter of 2018 from RO110.34mn in the same period a year ago, mainly due to higher retail fuel prices this year. 'The retail business volumes have stabilised over the last three months; however, they remain lower than 2017 due to changes in demand patterns', Shell Oman said.
Al Maha Petroleum's first quarter net profit fell 27 per cent to RO1.15mn from RO1.57mn in the same period of 2017, while total sales grew 11 per cent to RO112.03mn during in the first quarter of this year.
According to Al Maha Petroleum's first quarter financial report, the Ministry of Oil and Gas announced a uniform fuel price margin structure for all retail products effective from March 1, 2018. 'This coupled with reduced activity in the internally operated joint fuel depot at Mina Al Fahal and increased fuel up-liftments from the new Al Jiffnain with higher depot charges, have squeezed our margins further', Al Maha Petroleum said.
The company said it is in continuous negotiation with the Ministry of Oil and Gas highlighting the effect of the new price structure on operational and financial performance and persuading the ministry for upward revision of margins.
'Retail sales growth is affected by the decrease in demand on account of rising pump prices and decline in the growth of automobile industry and cautious spending by public in general', Al Maha Petroleum added.
Oman Oil Marketing's net profit decreased three per cent to RO1.81mn during the first quarter of this year, while its sales revenue grew 23 per cent to RO145.83mn in the first three months of 2018.
'This growth [in revenue] was supported by increase in fuel prices, the opening of new service stations and active marketing campaigns generating more sales volume. The company's profit has been much impacted following the move to the new terminal in Al Jiffnain and changes in the marketers' margin', Oman Oil Marketing said in its report released to the MSM.
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