GuyOil records reduced profits for 2017— Report

Guyanese consumers pay almost double for fuel when compared to consumers of some developed countries

-insists it lost market share for gasoline

The Guyana Oil company (GuyOil) has recorded reduced profits for last year compared to previous years, as the company’s earnings from motor gasoline is on a downward slide, to which efforts are being made to arrest.

This was according to the company’s 2017 Annual report which was recently laid in the National Assembly. According to the report, the company recorded a gross profit of $4.7 billion for 2017. Its net profit, after tax, was $1.8 billion.

All of this is a decrease from 2016 when its gross profit was a significantly higher $6 billion and its net profit after tax was $2.6 billion. This means its gross profit decreased by 20.76 per cent and its net profit by 29.13 per cent. In the report, GuyOil explained why this happened.

“The major contributory factor was the performance of motor gasoline, which accounted for 58 per cent of revenues in 2017. Gasoline sales and the associated gross profit both declined by 4.67 per cent and 21.5 per cent respectively in 2017 as compared to 2016,” the report stated.

While profits are down, the company’s total revenue for the year has increased to $35.2 billion, as compared to $31.9 billion in 2016. This, the report notes, is an increase of $3.3 billion or 10.394 per cent.

“During 2017, GuyOil lost market share with respect to its flagship product, motor gasoline. Efforts have to be made in 2018 to arrest this decline,” the report states, adding that “the company’s drive to expand its market share for fuel and lubricants dictated an aggressive posture.”

According to GuyOil, there was a deliberate emphasis on aggressive pricing strategies, as well as continuous staff training and development initiatives. The company noted that the environmentally friendly Ultra Low Sulphur Diesel (ULSD) was introduced to local markets. However, it acknowledged that there is a need for general improvements to customer service.

Questions about GuyOil’s financial performance have been raised before. When Finance Minister Winston Jordan had previously said that Guyoil lost market share in 2017 owing to its performance, questions were raised about the facts he presented when a former high-ranking official at the State agency had denied this.

Eric Whaul, who worked at Guyoil as its Sales and Marketing Manager until his services came to a sudden end earlier this year, worked at the State entity throughout the 2017 fiscal year. Questioning the data being fed to Jordan, Whaul had revealed to <<<Guyana Times>>> in an interview that the entity sold 23,000 more barrels of fuel in 2017 when compared to its sales in 2016. Whaul officially took over the portfolio of Sales and Marketing Manager in May 2016.

“GuyOil did not lose market share in 2017,” he had insisted. “In 2017, Guyoil Aviation Services Inc sold 34,500 barrels aviation fuel above its 2017 budget and more than what it sold in 2016.” He added, “In 2017, Guyoil sold 145,000 litres lubricant more than what it sold in 2016.”

“In 2017, Guyoil surpassed its budgeted after-tax profit. GuyOil revised its after-tax profit upwards in 2017 to $1.89 billion and we achieved $1.85 billion. GuyOil was 4700 barrels ahead of its 2018 Budget at the end of February 2018.”

While he acknowledged that GuyOil fell short on its budgeted volumes in 2017, Whaul pointed out that the entity exceeded its original budgeted after-tax profit. However, the marketing specialist noted that the business climate has not been a productive one.

“It is no secret that companies were complaining all year about the decrease in business, and in September 2017, the numbers showed that reported fuel imports were down by over four per cent. In fact, in that same printed article, growth rate for 2017 was reported at 2.1 per cent against projected growth of 3.9 per cent.”

The company’s books were audited by Chartered Accountants PKF Barcellos Narine and Company, on behalf of the Audit Office of Guyana. Auditor General Deodat Sharma has said that the consolidated financial statements are an accurate reflection of GuyOil’s finances at 2017 yearend.

Meanwhile, the company declared final dividends of $1.2 billion for 2017. The company’s capital expenditure for the year amounted to $777.5 million. This includes $457.7 million on construction works, $256.1 million on motor vehicles, $30.5 million on office furniture and fittings, $13.1 million on machinery and equipment and $19.9 million.

Industrial relations

Finances aside, GuyOil reported that its industrial relations remained stable throughout the year. It pointed to the 2-10 per cent across the board salary increases it gave its employees retroactive to January, in accordance with Government salary increases. In addition, an annual incentive bonus of four weeks was paid to employees.

“Training continues to be an integral part of the company’s management strategy. Staff attended training seminars on supervisory management, customer service and occupational Health and safety, HIV.”

“Customer sales representatives attended seminars on customer service, marketing and product knowledge. During the year, some 3,960 man hours of in-house and external training were conducted,” the company added.


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