Revving up on aviation
Al Maha increased its market share by boosting retail and bulk sales

Riding on the overall boom in the economy in general and the construction industry in particular, Al Maha Petroleum Products has improved its financial performance but had to be content with sixth rank this year. The company posted a revenue growth of 30 per cent in the financial year 2006 as compared to 22 per cent in 2005.

In a short space of time span, Al Maha Petroleum Products Marketing Company S.A.O.G has many feathers in its success cap. Tremendous growth followed the opening of the first fuel station at Al Khuwair on 24th September 1994. In 1995 two more stations were added. One located in the Capital area and the other in Sohar. By the end of 1999, 52 filling stations had sprung up at various places all over the country. Today the company ‎proudly boasts of having over 145 filling stations till end of May 2007 throughout the country that have been catering to the fuel needs of even the remotest area in Oman. The right combination of experts, professionals, systems, technologies and affiliates together with an innovative head office has made this possible in such a short span of time.

Besides being in the retail business, Al Maha has become prominent supplier of fuel and lubricants to a number of Government Ministries. It is also a key supplier to a number of national and international companies operating in the Sultanate of Oman.

Taking advantage of the overall growth of the economy in 2006, we focused on enhancing our filling stations network to increase our market share in the retail sector and made substantial gains in bulk and aviation fuel sales.

The year that was
Even though the crude oil prices varied during the year, there was no significant variation in the purchase and selling price of the company’s products, except in the case of aviation fuel that increased during the later part of the year.

The primary challenges identified in 2006 were shareholders’ wealth, net profit, competition, customer service, provision of better infrastructure facilities, tight profit margins and environmental issues. The net profit of RO4.1 million means a growth of 25 per cent over RO3.3 million in 2005. The growth in sales of 30 per cent as compared to 2005, is attributed to the growth in sales volume by 19 per cent in all sales sectors and the increase in selling prices of aviation fuel and diesel in May 2005. Earnings per share grew by 25 per cent, from baiza 545 in 2005 to baiza 681 in 2006 due to the increase in net profit. Return on equity ratio increased from 22.7 per cent last year to 25.5 per cent in 2006. The Board of Directors recommended a dividend of baiza 400 per share (40 per cent) against 2006 profit (baiza 350 per share was paid against 2005 profit).

Retail sales grew by 16 per cent in 2006 as compared the year before, and contributed to the favourable revenue performance. This remarkable increase was largely attributable to the increase in sales volume by 13 per cent. The increase in retail sales volume was the result of a number of factors including the construction of 19 filling stations, which brought the total number of filling stations to 138 at the end of 2006, and the normal growth in the retail sales sector. Al Maha smart fuel cards also continued to contribute to the increase. Retail sales are expected to grow further by 16 per cent in 2007.

Bulk sales saw an increase of 30 per cent in 2006 as sales volume went up following increased construction activities all over Oman and in Sohar region in particular. Bulk sales are expected to grow by 12 per cent in 2007.

Aviation commercial sales grew by almost 100 per cent in 2006 over last year mainly due to the increase in sales volume and selling prices in response to similar increase in purchase prices. On the other hand, the company–as in previous years–managed to achieve a Lost Time Injury (LTI) Free Year in 2006 as well. To maintain the trend, Al Maha continues to look upon all company and contractor employees to comply with laid-down procedures and safe working practices at all times. In this regard, filling station operations were also critically audited to ensure the company’s dealers and forecourt staff fully complied with its operating procedures.

With Omanisation reaching 82 per cent at the end of 2006, the company is reviewing its strategies and policies to enable staff to progress and pursue a long-term career with it.

The company has in place Health, Safety and Environment Management System Manual which was revised to suite the local operating conditions. During the year, the focus was on training the drivers in groups as well as individually as the drivers work without supervision most of the time. In order to achieve this objective, the firm recruited a young and energetic Omani HSE training executive. It has drawn HSE action plans at various levels and the implementation of these plans are being monitored by the respective HSE committees. They are fully supported by Corporate HSE Committee.

It also has drawn up HSE related training programme for all our employees at all locations, and as a first step, completed ‘Defensive Driving Course’ for all its employees. The feedback looks very good. In the year 2006, filling station operations were critically audited to ensure that the company’s dealers and forecourt staff fully comply with the operating procedures.

The year ahead
The company’s retail volumes largely come from Muscat and Batinah regions that contribute nearly 48 per cent, while AL Dakhliyah and AL Sharqiyah provided 28 per cent to 30 per cent of volumes, respectively.

The year 2007 is expected to see similar retail volumes. The company hopes that the continued all-round development vigorously pursued by the Government of Oman will further create and increase the demand for its products, on the basis of which we plan our resources and actions in a way to maximise the shareholders returns.

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