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Union Gas achieves 84.9% surge in net profits on the back of significant revenue growth - 2018 Annual Report

2020/03/06

Source: Canva

Union Gas Holdings Limited (Union Gas)

 

Source: Union Gas

Union Gas is a provider of fuel products in Singapore and has been in operations for over 40 years. The company holds three key businesses: Retail Liquefied Petroleum Gas, Compressed Natural Gas and Diesel, servicing both domestic households and commercial customers.

FY 2018 Financial Highlights:

Source: Union Gas FY 2018 Annual Report

  • Union Gas’s revenue for FY 2018 surged by 43.8% year-on-year to SGD 56.4 million, while net profit jumped by 84.9% to SGD 6.4 million.
  • FY 2018 gross profit rose by 39.5% year-on-year to SGD 19.31 million, but gross profit margin declined marginally from 35.3% to 34.3%.
  • Consequently, Union Gas’s earnings per share rose from 1.89 Singapore cents in FY 2017 to 2.96 Singapore cents this year.

Performance Drivers:

Source: Union Gas FY 2018 Annual Report

Performance Drivers (Positive Factors)

  • Retail LPG (Domestic)

Union Gas’ Retail LPG (Domestic) segment sells bottled liquefied petroleum gas (LPG) cylinders and LPG-related accessories to domestic households in Singapore. Revenue from this segment improved by 22.1% from SGD 23.35 million in FY 2017 to SGD 28.50 million in FY 2018. This improvement came on the back of a higher average selling price of the company’s bottled LPG cylinder (in line with an increase in Saudi Aramco Contract Prices), as well as sales volume growth.

  • Retail LPG (Commercial)

Union Gas’ Retail LPG (Commercial) segment sells commercial LPG supply to hawker centers. Revenue from this segment also experienced growth of about SGD 5.58 million owing to the acquisition of U-Gas on 31 May 2018.

  • Diesel

Union Gas’ Diesel business sells and distributes diesel to retail customers at the company’s fuel station (located at 50 Old Toh Tuck Road), as well as the bulk sale of diesel to commercial customers. Revenue from this segment surged by 99.4% from SGD 10.09 million in FY 2017 to SGD 20.12 million in FY 2018. This significant increase was due to a higher average selling price of the cost of diesel (arising from an increase in international oil prices), as well as sales volume growth from an increase in sale of diesel to commercial customers.

Performance Drivers (Negative Factors)

  • CNG

Union Gas’ CNG business sells compressed natural gas (CNG) primarily to natural gas vehicles. Revenue from this segment declined by 62.4% from SGD 5.75 million in FY 2017 to SGD 2.16 million in FY 2018. This decline was primarily as a result of a decrease in sales volume by 71.6%, due to a drop in the number of natural gas vehicles (vehicles that operate on CNG) in Singapore. The decline was partially offset by a 32.8% year-on-year hike in the average selling price of the company’s CNG – as the cost of purchasing natural gas rose on the back of increased High Sulfur Fuel Oil prices.

Source: Union Gas FY 2018 Annual Report

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