- STO posted a net profit of MVR 281.1 million for Q3 2026, up 51.1% year-on-year but only 0.5% above the previous quarter, while revenue fell 7.2% to MVR 6.48 billion due to lower global fuel prices.
- Operating profit rose 23.3% to MVR 400 million, helped by reduced staff costs from the medical segment transition and a MVR 29.2 million gain on asset disposals, though higher net finance costs and taxes limited net profit growth.
- Net cash from operating activities fell nearly 90% to MVR 38.9 million, as trade and other receivables jumped MVR 1.19 billion to MVR 7.88 billion, largely reflecting the medical segment restructuring.
- Net cash from operating activities fell nearly 90% to MVR 38.9 million, as trade and other receivables jumped MVR 1.19 billion to MVR 7.88 billion, largely reflecting the medical segment restructuring.
State Trading Organization (STO) maintained its quarterly profit despite lower fuel prices reducing revenue, but a sharp fall in cash generated by operations shows how its medical business restructuring is affecting the company’s finances.
STO recorded a net profit of MVR 281.1 million for the third quarter of 2026, covering July to September. This was 51.1% higher than the same period last year, although only 0.5% above the preceding quarter. The results indicate that earnings have stabilised at a higher level, with quarterly profits remaining between MVR 276 million and MVR 281 million throughout 2026.
Revenue fell 7.2% from the previous quarter to MVR 6.48 billion. STO attributed the decline mainly to lower global fuel prices, which outweighed higher fuel sales volumes and sustained performance in its non-fuel businesses.
That distinction matters for a company which derives 79% of its revenue from fuel. Lower sales revenue can reflect changes in international prices even when the volume of fuel sold increases. The quarterly decline therefore does not, by itself, indicate weaker demand.
STO retained a larger share of each rufiyaa of sales as gross profit, with its gross margin improving from 10.8% to 11.4%. However, gross profit in monetary terms declined from MVR 757 million to MVR 738 million.
The improvement in operating profit came further down the income statement. Operating expenses fell from MVR 449 million to MVR 393 million, mainly because staff costs declined following the transition of the medical segment and the associated transfer of employees. Other operating income also increased, while the cash flow statement recorded a MVR 29.2 million gain on the disposal of property, plant and equipment.
Together, these changes helped operating profit rise 23.3% to MVR 400 million. Part of that improvement therefore reflects restructuring and asset disposals, which should be considered when assessing how much of the increase can continue in future quarters.
The higher operating profit produced little additional net profit because net finance costs and income shifted from a MVR 11.1 million gain in the second quarter to a MVR 48.1 million cost in the third. The income tax charge also increased.
The more pronounced change was in cash generation. Net cash from operating activities fell from MVR 382.4 million to MVR 38.9 million, a decline of almost 90%. Trade and other receivables, representing amounts owed to STO, increased by MVR 1.19 billion to MVR 7.88 billion.
STO said the increase in receivables and reduction in inventories mainly reflected the restructuring of its medical segment and the sale of inventories connected with those operations. The movement therefore cannot simply be treated as evidence of customers taking longer to pay. It does, however, mean that more of the company’s assets were held as amounts receivable rather than stock or cash.
Higher interest and income tax payments also reduced operating cash flow during the quarter.
Despite this, STO’s cash balance increased from MVR 862 million to MVR 1.25 billion. The main support came from MVR 444 million in net investment cash inflows, including MVR 324 million in proceeds from financial assets held to maturity. This strengthened available cash, although it came primarily from investment activity rather than day-to-day trading.
STO ended September with higher equity and a modest improvement in its ability to cover short-term liabilities with current assets. Its unaudited results show a business maintaining earnings through lower costs and improved margins, while the medical restructuring changes how those earnings translate into cash. The timing of receipts from the enlarged receivables balance will be an important factor in its cash generation over the coming quarters.
