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Ceylon Petroleum Corporation, Sri Lanka breaks even
24 Nov, 2013 07:46:14
Nov 24, 2013 (LBO) - Sri Lanka's state-run Ceylon Petroleum Corporation has reached break-even level and made a marginal loss after adjusting for losses on derivatives, finance ministry report said.
The CPC had made a 3.8 billion rupee profit in the nine months to September 2013 but made an accounting loss of 3.7 billion rupees after a 7.6 billion rupee charge for losses on oil derivatives.

CPC lost out on derivatives it bought during a commodity bubble in 2008 when oil prices collapsed when a US Fed generated credit bubble deflated.

In the nine months to September the CPC had posed revenues of 390 billion rupees against 515 billion rupees for the full year 2012, and had cost of sales of 386 billion rupees, showing that the utility was making gross profits.

It had interest charges of 12.3 billion rupees for the nine months (18.3 billion rupees for the full year 2013).

Outstanding bank borrowings were 203 billion rupees by end September 2013, down from 211 billion rupees on December 2012.

CPC was expected to post 520 billion rupees in revenues, 3.5 billion rupees in losses after making an 8.6 billion rupee charge for oil derivatives and its loans would come down to 190 billion rupees by year end.

Losses at CPC and CEB was one of the reasons for Sri Lanka's private savings to go down in 2012.

Due to a mis-classification, state enterprises are classed at private in Sri Lanka, understating the aggregate private saving rate.

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READER COMMENT(S)
3. Numbers Game Nov 25
@K De Zoysa
If you want to find out the overheads plus any other incidentals you can work backwards from gross profits and deduct interst and profits.

But CPC has made a a Rs3.8bn profit so the point about breaking even is valid. The 7.6 bn oil derivatives charge is a prior year item. It they paid the hedge writer in a single payment - after borrowing from a bank say - this is simply amortization.

As far a the people/customers are concerned this company is selling goods at a profit now.

The net paying down of debt shows that it is definitely running cash profits.

2. Gamini Lindagedera Nov 25
CPC is, perhaps, the only Petroleum Company in the world to run n losses despite selling it's products at one of the world's highest rates.
1. K De Zoysa Nov 24
I think that article is half baked. It would be helpful how it will be able to be breakeven. It is not clear Cost of Sales ( COS ) of Rs 386 billion is for 9 months of 2013 & 12 months of 2012.

The only thing reasonably clear was a Interest for 2013 will be Rs18.3 b & Derivative charge is 8.6 billion

No one can work out a simple P & L for 9 months or 12 months from the figures given

The only way one can read these is

Sales 520

COS 496.8

GP 23.2 ( 4.4% 0

Less:
Interest 18.3
Derivates 8.6

Net Loss 3.7

Where are the overheads of the company.

The writer has no idea of a Profit & Loss Account or a Balance Sheet.