Despite sales decline, Attock Petroleum Limited PAT rise by 21pc

Despite a drop in sales amid the economic activity downturn amid the COVID-19 pandemic, Attock Petroleum Limited (APL) manage to post a profit after tax of Rs 1,485 million for the three-month period ended September 30, 2020.

The company’s PAT increase by 21pc over the same period last year, as compared to Rs 1,225 million recorded in 2019. The results translate into earnings per share of Rs 14.92 as compared to EPS of Rs 12.31 in the same period last year.

During the period under review, APL recorded net sales revenue of Rs 45,115 million as compared to Rs 59,208 million earned during the same period last year.

This reduced net sales revenue is attributable to decreased average selling prices of petroleum products, as compared to the same period last year and a 4pc decrease in volumes sold due to sluggish economic activity, the influx of smuggled products, weakened business growth and reduced transportation during lockdown amid COVID-19 situation.

On the other hand, a substantial increase in the demand for Furnace Oil together with a significant increase in the prices at the end of June and July 2020, due to recovery from the rock bottom level, led to significant inventory gains and an increase in the gross profit.

However, an increase in operating expenses due to increased depreciation charge and a decrease in operating income & net finance income negatively affected the profitability. The company said that during the period under review, the global economy entered the recovery phase whereas the after-effects of the COVID-19 pandemic continued to affect businesses at varying levels.

Similarly, the oil industry also witnessed volatility due to changing demand patterns. The company was of the view that the easing of lockdown during the period enabled the smuggling of products, such as High Speed Diesel, within the country which reduced the sales. Accordingly, APL sales volume of High Speed Diesel decreased by 27pc.

On the other hand, the sales volume of High Octane Blending Component increased by 132pc as its prices were reduced by the OMCs in order to enhance their market share. Further, the sales volume of Furnace Oil also increased by 37pc as the power producers shifted to Furnace Oil being the cheaper alternative for the generation of electricity.

The Company informed that it has relied on imports as an alternate supply source due to the unavailability of indigenous products to meet the demand and hence is importing frequent cargoes of Premier Motor Gasoline (PMG) and Furnace Oil.

Sharing the future outlook, APL said that in order to mitigate the effects of the COVID-19 pandemic a formal strategy has been put in place.

It informed that substantial investments have been made recently with Sahiwal and Daulatpur Bulk Oil Terminals which were successfully commissioned towards the end of last year have started their full-fledged operations and shall prove to be advantageous for the Company by tapping into surrounding regions.

Further, construction work is rapidly progressing at Port Qasim Bulk Oil Terminal, Karachi and the Project is near its completion. The strategic location of this Terminal shall enable the Company to efficiently handle imports and its connection to the White Oil Pipeline for transportation of products to mid-country and up-country shall ensure timely availability of products. Expansion work at Shikarpur Bulk Oil Terminal was also completed during the period under review.

It is pertinent to inform that the scribe has mistakenly written Attock Refinery Limited in the previous story, the error is highly regretted.