Earnings Preview: APL's profit to be dragged down by drop in furnace oil sales

January 21, 2019 (MLN): Attock Petroleum Limited (APL) is scheduled to announce its financial results on 22^nd January, 2019 for the period 1HFY19 ended on December 31, 2018.

Based on projections from various research houses, the market expects APL’s profit after tax for 1HFY19 to be clocked in between Rs 2.86 billion to Rs 2.9 billion, while in 2QFY19, the company is likely to post a profit in between Rs 1.3 billion to Rs 1.32 billion with EPS ranging from Rs 12.8 to Rs 13.3.

This suggests that the company’s expected earnings in 1HFY19 is expected to increase, while the company’s year-on-year earnings this quarter is likely to decline.

Arif Habib Limited (AHL) expects the company to post an after tax profit of PKR 2,869 million (EPS: PKR

28.83) for 1HFY19, up by 2% YoY, while on quarterly basis the company is expected to exhibit a profit of PKR 1,322 million with EPS RS 13.28.

However, the topline of the company is expected to grow by 49% YoY on the back of massive increase in product prices. Whereas on quarterly basis topline of the company is poised to register a decline of 4% to PKR 55.76 billion amid slowdown in sale of high margin Furnace oil.

Another research house Pearl Securities Limited, expects the company to post an after tax profit of PKR 2,867 million for 1HFY19, up by 2% as compared to the same period last year.

Whereas on quarterly basis, the company is expected to post a profit after tax at PKR 1319 million (EPS PKR13.26) in 2QFY19 versus PKR1480 million (EPS PKR14.87) recorded in the same quarter last year, demonstrating a decline of 11%YoY.

Explaining further, Mr. Muhammad Nabeel at Pearl Securities told Mettis Link News that the decline in the sales of Furnace oil and lower inventory gains last year are the two important reasons behind the decline of profit expectations in 2QFY19.

Similarly, Foundation Securities Limited expects APL to face a plunge in profits by 14% YoY and 18% QoQ in 2QFY19, that would result in flattish YoY 1HFY19 profitability to Rs28.3/sh. As per the research house, the EPS in 2QFY19 is expected to clock in at Rs12.8.

Speaking with Mettis Link News, Mr. Arsalan Siddiqui at Foundation Securities briefed that the gross profit of the company in 2QFY19 is expected to decline YoY owing to higher base year (elevated inventory gains) and decline in volumes by 5% YoY.

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