The gas shortage once around the horizon, now stares the economic managers in their faces. And the countrys leading integrated gas company continues to face natural gas shortage due to the widening schism between the supplies from the E&P companies and burgeoning natural gas demand. The ballooning of supply constraints faced by Sui Southern Gas Company (SSGC) has translated into a fall in gas sales volumes by 4.6 percent to 88bcf for 1QFY12 compared to 93bcf in the similar period FY11. Plausibly, 2QFY12 also faced similar plunge as the gas shortage worsened during November and December FY12. One major cause of the decline in the gas sales has been the decline in Badin gas field by more than 40 percent during the period. However, SSGC was able to post sales growth of more than 7 percent during 1HFY12 versus 1HFY11. Although the gross margins have improved during 1HFY12 vis-à-vis 1HFY11, the second quarter FY12 sales have not been able to absorb the cost of purchases and T&D costs fully. Further, SSGC has faced non-recovery of trade debts to the tune of almost Rs.30 billion during the said period, majority of which are from KESC. This has severely dented the operating income. Besides the leakages and measurement errors that constitute UFG, the Company has been facing tremendous pressure in the form of gas thefts and third-party damages. It seems that this third factor has taken its toll on the profitability of the Company. As a consequence, the net margins have dwindled with Companys net income falling by 27 percent during 1HFY12 compared to the similar period of FY11. Short-term borrowing is what the Company has been reverting to every now and then amid the circular debt crisis. This remains the primary reason for the hike in finance costs for the period. Due to the increased weighted average cost of gas and weak liquidity situation, Sui Southern Gas Company Limited is seeking a hike in gas prices of more than Rs.8 per mmbtu for the consumers by FY13. With profits falling, it seems that the earnings of the Company during the rest of FY12 would remain a little trained, especially due to the severity of the ongoing gas crisis in the country. On the brighter side, the Company will possibly increase its share of non-operating income with the new LPG plant at Port Qasim with a total capacity of 6,500MT. Also, recently the Company has integrated Kunar-Pashaki gas field which has introduced 100 mmcfd of gas into the system. It also plans to inject a further 100 mmcfd of synthetic gas into the transmission system in the coming year to trim down the gas shortage.
============================================================================================================================================ Sui Southern Gas Company Limited Sui Southern Gas Company Limited ============================================================================================================================================ (Rs mn) 1HFY12 1HFY11 chg 2QFY12 2QFY11 chg (Rs mn) 1HFY10 1HFY9 chg 2QFY10 2QFY9 chg ============================================================================================================================================ Net Sales 62,848 58,366 8% 31,935 29,842 7% Net Sales 53,883 49,401 8% 27,749 25,657 7% Gross Profit 1,623 1,093 49% 888 910 -2% Gross Profit 562 31 49% 932 955 -2% Other Operating Income 1,532 2,010 -24% 770 922 -16% Other Operating Income 1,532 2,011 -24% 1,074 1,226 -16% Operating Profit 1,030 871 18% 304 329 -8% Operating Profit 713 554 18% 305 329 -8% Finance cost 3,596 2,410 49% 1,794 1,343 34% Finance cost 3,596 2,411 49% 893 442 34% Profit for the Period 1,539 2,113 -27% 744 999 -26% Profit for the Period 2,687 3,260 -27% 1,255 1,511 -26% EPS (Rs) 1.75 2.40 -27% 0.84 1.13 -26% EPS (Rs) 3.05 3.70 -27% 1.42 1.71 -26% Gross Margin 2.58% 1.87% 2.78% 3.05% Gross Margin 3.12% 3.31% 3.49% 3.67% 3.86% Operating Margin 1.64% 1.49% 0.95% 1.10% Operating Margin 0.81% 0.65% 0.49% 0.33% 0.17% Net Margin 2.45% 3.62% 2.33% 3.35% Net Margin 3.09% 3.14% 3.19% 3.24% 3.29% ============================================================================================================================================
Source: KSE notice Source: KSE notice
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