Strategy & Performance - Al Maha Petroleum Products Marketing Co. SAOG.


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Business & Objectives

The Company is primarily engaged in the marketing & distribution of petroleum products viz. super, regular, diesel, aviation fuel, kerosene, & lubricants.

The company operates with the following objectives:
1) Increase the shareholders returns along with value added contribution to society
2) Increase the overall market share
3) Improve its image in market through better customer service
4) Total commitment to the protection of Health, Safety and Environment
5) Recruiting and empowering Omani youths

Business Operations

The Company operates its business through the following segments:
1) Retail sales
2) Commercial sales
3) Aviation fuel sales

1) Retail Sales

Retail sales decreased by 3% in 2009 when compared with 2008 largely due to the reduction in general economic activity resulting from the recession experienced in the second half of 2008 and in the first half of 2009, in spite of opening of 7 filling stations, which brought the total number of filling stations to 163 at the end of 2009.

However, due to improved economic conditions, retail sales are expected to grow up by 7% in 2010.

2) Commercial Sales

Commercial sales saw an overall decrease of 19% in 2009 mainly due to the discontinuation of consumption of petroleum products by certain commercial customers in the second of half of 2008.

The commercial sales are expected to increase by 15% in 2010 on account of securing some long term fuel supply contracts and increasing our customer portfolio.

3) Aviation Fuel Sales

Even though aviation fuel sales volume has increased by 27% in 2009 over 2008 on account of increased consumption by our existing and new customers, the aviation fuel sales value has seen a reduction of 25% in 2009 when compared with 2008, due to decrease in international selling prices of aviation fuel.

The aviation fuel sales are expected to increase by 6% in 2010 on account of some new customers.

Financial Performance

	2009	2008	Increase / (Decrease)
	RO-Million	RO-Million	RO-Million	%

Sales	171.0	191.7	(20.7)	(11%)
Expenses	13.3	12.5	0.8	6%
Net Profit after tax	5.67	7.35	(1.68)	(23%)
Net assets	29.8	27.6	2.2	8%

Earning Per Share – RO	0.822	1.065	(0.243)	(23%)
Net assets per share – RO	4.320	3.998	0.322	8%
Return on equity - %	21.6%	30.3%	(8.7%)	(29%)

Sales have decreased to RO 171 million in 2009 (2008: RO 191.7 million), a decrease of RO 20.7 million (11%) on account of the decrease in retail, commercial and aviation sales.

Expenditure rose by RO 0.8 million (6%) mainly due to increase in licensing fees in 2009 which was an annual fixed amount till 2008 and amended by a Ministerial Decision to be at the rate of Baizas 4 per each Omani Riyal of the total annual revenue and further due to increase in depreciation, technical fees, operating fees, maintenance expenses and provision for impairment of receivables.

Net profit after tax decreased to RO 5.67 million in 2009 (2008: RO 7.35 million), a decrease of RO 1.68 million (23%) mainly due to the decrease in sales and partly due to increase in expenses and increase of the purchase prices of petroleum products from Sohar Refinery with effect from Aug 2009.

Below is a chart which indicates the net profit, dividend and net equity since 2004 (when the company became public):

Opportunities, Obstacles / Risks

The economic recovery witnessed during the later part of 2009 has reactivated many sectors of the economy thereby promising a better year ahead, with the Government already initiated continuation of ongoing projects and promote new basic infrastructure projects.

The growth in the non-oil sectors mainly tourism, will also significantly increase demand for our products.

The unplanned charges, severe competition and tough profit margins continue to be our main challenges in the year ahead.

Health, Safety and Environment (HSE)

This important aspect continues to be our one of our prime objectives. We have been successful in achieving ‘Lost Time Injury Free and Fatality Free Years’, in spite of two minor accidents during the year, involving contractors’ vehicles, but without any loss of life. We aim to improve our safety standards in the year ahead with the continued compliance of HSE policies & procedures by all of our customers, suppliers and the staff at all times.

Employees

Employees constitute the most valuable resources of our organization, as we dedicate and re-emphasise the growth and welfare of this invaluable asset. Recruiting young Omanis & training them to be capable and efficient has been the forefront objective of our Human Resources policy. Our Omanisation level has reached 89% at the end of 2009. The number of employees as at 31 Dec 2009 stood at 127.