RPL Sees Fall Off In Bottom Line

Regency Petroleum Company Limited (RPL) recorded a net profit of $5.27Mn for the second quarter ended June 30, 2023. This represents a 65.8% yoy decrease in profitability. Similarly, profit for the six months ending June 2023 decreased by 35.6% to $25.01Mn
Revenue for the quarter was down marginally by 0.1% yoy to $179.79Mn despite larger volumes sold. This was due to the fall-off in fuel prices over the period. However, revenues for the six months increased by 9.4% yoy to $363.27Mn and were driven by larger volumes that offset falling prices.
Higher trucking costs driven by inflation and increased business activity were the main reasons for the 4.6% increase in direct cost over the three months ending June 2023. Similarly, higher trucking cost was the main driver for the 12.6% increase in direct cost over the six months. Consequently, this led to the fall-off in gross margin to 15.1% (from 18.9%) and 16.4% (from 18.8%) over the three months and the six months ending June 2023, respectively.
For the quarter, operating expenses were 98.3% higher yoy at $12.24Mn as the company incurred fees related to being publicly listed such as directors' fees, higher audit and accounting fees, along with higher bank charges (given rising interest rates), advertising and promotion, as business ramps up. For the six months ended June, total operating expenses grew 114.3% from $11.33Mn to $24.29Mn.
RPL’s stock price has increased by 57.9% since the start of the calendar year. The stock closed Wednesday’s trading session at $2.51 and currently trades at a P/E of 78.4x which is above the Junior Market Distribution Sector Average of 15.6x.
The company recently announced its partnership with JusGas Distributors Limited which will be the primary distributor of its bulk LPG products in the corporate area of Kingston & St. Andrew. This partnership will provide the opportunity to build new relationships with businesses in the KSA region which will be a critical space for growth in the future.

(Source: JSE)