Pryce 9M2015 Net Income Jumps 116%

Makati—(PHStocks)—As of the third quarter of 2015, Pryce Corp.‘s (PSE: PPC) consolidated net income rose to a new high notwithstanding a drop in revenues. Income from operations for the period January to September jumped by 116.2% from PhP267.4 million in 2014 to PhP578.3 million in 2015, driven mainly by the large increase in LPG sales volume, with improvement in consolidated gross margin and tighter cost control.

While revenue in peso terms declined by 16.2% from PhP4.9 billion in 2014 to PhP4.1 billion in 2015 (due principally to a 60% fall in LPG prices year-on-year), LPG sales volume for the period rose by 42.8%, from 72,644 MT in 2014 to 103,769 MT in 2015. The following factors contributed to such notable growth in sales volume: a) the lower retail price that made LPG affordable to a larger number of household consumers; b) overall economic growth; and c) the expansion in the company’s import and distribution infrastructure for LPG, particularly in Luzon.

LPG sales accounted for the bulk of the company’s revenues at 90.7% in 2015 compared to 80.4% in 2014. Revenues from the other products such as industrial gases, fuels, real estate, hotel operations and pharmaceutical products (the latest addition to the Pryce Group) contributed an aggregate of PhP383 million in 2015. Revenue from other products in 2014 was much higher though at PhP957.7 million since PhP571 million of this came from the one-time sale of a commercial property to a mall developer; excluding this non-recurring sale, revenue from other businesses in 2014 was only slightly higher at PhP386.7 million.

Gross margin from LPG and gases widened from 14.1% in 2014 to 23.9% in 2015. The gradual stabilization of the international contract price (CP) for LPG to relatively low levels in 2015 favored the recovery of margins lost in the previous period during which the CP was spiraling downwards.

Despite increased volume, operating expenses were successfully reduced by 18.8% from PhP536.7 million in 2014 to PhP436 million in 2015. Operating expenses were held in check even as management provided support for more aggressive marketing efforts to increase sales volume. This tight rein on operating costs resulted in a slight improvement in expense ratios from 11% of sales in 2014 to 10.6% in 2015.

After adjustments for other income and expenses and provision for income tax, net income after tax more than doubled at 124.7% from PhP201.7 million in 2014 to PhP453.2 million in 2015.

The company expects 2015 to be a banner year and is on track to meet its income projections. Its sustained efforts to expand market reach through various marketing initiatives and the continued beefing up of its import and distribution infrastructure in Luzon will enable the company to have a stronger foothold in the market.

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