April 26, 2021 (MLN): After witnessing a feeble FY20 financial performance where earnings tumbled to levels not seen in at least a decade, Attock Petroleum Limited (APL) posted a decent recovery, as its net profits during 9MFY21 clocked in at Rs3.7bn (EPS: Rs36.8), up by 4.2x YoY, largely due to a low base as COVID-19 induced decline in oil prices imparted heavy inventory losses during 3QFY20.
The top line of the company deteriorated by 18%YoY to Rs159bn in 9MFY21 as compared to Rs194bn in SPLY, due to a decline in volumes by 3% YoY (volumes of MS and HSD dropped by 10% and 19% YoY).
The decline in volumes can be attributed to the influx of smuggled products and limited transportation activity as a result of the COVID-19 situation. However, an increase in margins of the petroleum products, particularly the ones which are imported, together with the efficient inventory management led to a whopping 2.85x increase in the gross profitability of the Company.
The gross margin of APL improved to 6% from 2% in SPLY amid higher inventory gains realized during the period under review.
The rise in gross profitability of the company was adversely impacted, to some extent by the increase in operating expenses by 23% YoY (2% of net sales) following the significant investment in storage and networks in recent years, and a reduction in finance income by 41% YoY.
The upsurge in APL’s profitability was also due to exchange gains observed during the period which lifted its other income by 36.5% YoY.
On the taxation front, the effective tax rate has come in at 29% – lower than 30% in the SPLY.
Overall, APL performed decently, where healthy inventory gains are the fruit of significant investment in the network and storages in recent years wherein APL can maintain up to 20/40 days’ worth of inventory of Mogas/HSD.
With regards to market share, APL has been on a constant decline with market share for 3QFY21 standing at 9% against 11% for 3QFY20 while market share in retail fuels stands at 8% against 10% in 3QFY20.
According to the report by AKD Securities, even though inventory gains uplifted the results, the decline in market share is concerning for APL. However, the plan to add a number of storage sites in the medium-term is expected to provide some respite and will aid the company in expanding its footprint.
|
Profit and Loss Account for the Nine months ended March 31, 2021 ('000 Rupees) |
|||
|---|---|---|---|
|
|
Mar-21 |
Mar-20 |
% Change |
|
Sales |
159,194,898 |
194,639,144 |
-18.21% |
|
Sales tax and other govt levies |
(23,496,179) |
(28,321,529) |
-17.04% |
|
Net sales |
135,698,719 |
166,317,615 |
-18.41% |
|
Cost of products sold |
(128,031,533) |
(163,634,861) |
-21.76% |
|
Gross profit |
7,667,186 |
2,682,754 |
185.80% |
|
Other income |
943,816 |
691,475 |
36.49% |
|
Net impairment losses on financial assets |
(234,054) |
(196,737) |
18.97% |
|
Operating expenses |
(2,697,350) |
(2,196,681) |
22.79% |
|
Operating Profit |
5,679,598 |
980,811 |
479.07% |
|
Finance income |
989,846 |
1,685,021 |
-41.26% |
|
Finance costs |
(1,114,426) |
(1,130,767) |
-1.45% |
|
Net finance income |
(124,580) |
554,254 |
– |
|
Share of loss/profit of associated companies |
(22,522) |
(180,451) |
-87.52% |
|
Other charges |
(381,227) |
(105,348) |
261.87% |
|
Profit before taxation |
5,151,269 |
1,249,266 |
312.34% |
|
Provision for income tax |
(1,487,229) |
(378,817) |
292.60% |
|
Profit for the period |
3,664,040 |
870,449 |
320.94% |
|
Earnings per share – basic and diluted (Rupees) |
36.81 |
8.75 |
320.69% |
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