RIO DE JANEIRO, BRAZIL – Despite a reduction in sales due to a loss of public trust, the Guyana Oil Company (GuyOil) was able to record profits that were more than double that of 2018.
According to GuyOil’s 2019 annual report, the company recorded US$2.587 billion in net profit after tax at 63.1% over the US$1.586 billion after tax profit recorded in 2018.
“Higher net profit was a result of higher gross profit, since total expenses only increased marginally,” it explains. The report also states that the US$6.071 billion in gross profit was a result of higher margins since acquisition prices were favourable.
These favourable acquisition prices were realised through agreements with two new suppliers, including a private fuel trading company from Jamaica – West Indies Petroleum (WIP).
The spot-contract purchases from WIP were initiated to reduce GuyOil’s vulnerability to single sourcing. Previously, Guyana’s fuel was sourced through the PetroCaribe agreement, which ended in 2015. Following its suspension an agreement was signed with the Petroleum Company of Trinidad and Tobago (Petrotrin) which ceased operations in 2018. The supply agreement was vested in Petrotrin’s replacement, Paria Fuel Trading Limited.
GuyOil, the report notes, has been able to maintain a market share of just about 25% and in 2019 sales revenue totaled US$37.516 billion, an 8.5% decrease from the US$41.016 earned in 2018.
It is explained that the combined wholesale and retail sales totaled 1,223,962 barrels compared to 1,310,783 barrels in 2018 a decrease of 6.6%.
The largest decrease in sales was recorded in motor gasoline which sold 63,749 barrels less, as well as gas oil which sold 54,122 barrels less. There was however an increase in the sale of fuel oil which sold 39,228 more barrels than in 2018.
The report acknowledges that in early 2019, a shipment of motor gasoline from West Indian Petroleum Limited emitted a very pungent odour during pumping at the service station. This odour as well as the “unrelated conflagration of two vehicles,” which was blamed on the fuel, led to a negative reaction from consumers and contributed significantly to lower sales.
The report stressed that the reduction in sales volume due to perceptions of quality were further compounded by the competition in the wholesale market segment using price strategy.
“GuyOil’s major competitors, who have much greater storage capacities, use a more flexible pricing policy, that trades off a reduction of the markup relative to GuyOil for higher sales volumes,” it was explained.
Costs of sales also decreased to US$31.445 billion from US$36.396 billion in 2018. This, the report explains, was due primarily to lower sales volumes and lower acquisition costs.
GuyOil imports, distributes, stores, and markets motor gasoline, gasoil, kerosene, fuel oil, ultra-low-sulphur diesel (ULSD), and Castrol lubricants. ULSD, regarded to be environmentally friendly, was introduced to the Guyana market in 2017.
The distribution network includes 48 dealer-owned, dealer-operated, and eight company-owned company-operated service stations.