APL-retail volumes driving growth

The oil marketing sector has been in the limelight this year after the improvement in the liquidity and rising petroleum product consumption in the country. Rising oil sales, particularly of furnace oil and motor gasoline, have been strengthening OMC revenues including that of Attock Petroleum Limited (APL).
Like previous two quarters, APLs performance during 3Q FY14 has been largely driven by improved retail sales; sale revenue during the cumulative 9M FY14 jumped by 25 percent year on year primarily due to approximately 40 percent increase in motor gasoline volumes, around 25 percent increase in diesel sales, and around 10-12 percent growth in furnace oil.
APL has been able to expand its retail networks-the key reason for the robust growth in petroleum product sales. And the overall market share of the OMC has seen a one percent jump in the latest quarter, i.e. 3Q FY14.
While there wasn much change in the firms margins, the bottom line benefited from not only the accretion in the top line but also a 93 percent year-on-year decline in the finance cost. Also better other income supported the bottom line well.
In short, the rise in earnings of APL during 9M FY14 is contributed by higher volumetric sales, better margins on products, lower finance cost, a surge in other income, and better currency position.
As far as the outlook is concerned, the approaching summer season will definitely increase furnace oil and diesel sales due to rising power and irrigation needs. The caveat for APL, however, is the low crude oil prices along with uncertainty in the materialization of margin revisions.

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Attock Petroleum Limited

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Rs (mn)                  9MFY14      9MFY13     chg    3QFY14    3QFY13     chg

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Net sales               146,665     117,237     25%    48,054    39,096     23%

Gross profit              4,937       3,931     26%     1,157     1,017     14%

Operating profit          4,677       3,663     28%     1,220       970     26%

Finance Income              808       2,038    -60%       286       647    -56%

Finance cost                 90       1,221    -93%        44       443    -90%

Profit for the year       3,649       2,945     24%       980       790     24%

EPS (Rs/share)               44        35.5     24%     11.82      9.52     24%

Gross margin               3.4%        3.4%              2.4%      2.6%

Operating margin           3.2%        3.1%              2.5%      2.5%

Net margin                 2.5%        2.5%              2.0%      2.0%

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Source: KSE Notice