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Hascol Petroleum Limited’s (PSX: HASCOL) profits have been nose diving since 2018. Though the company has only recently announced its financial performance for the nine months of CY20 (9MCY20), it’s not hard to guess what the year-end earnings would look like. The company blames the delay in announcement as well as weak performance to Covid; but one can see the erosion of profitability started more than two years ago; the oil marketing company that banks highly on imported fuel has been in losses since 2018. 2020 has been no different.

HASCOL’s revenues have been falling – and the decline in 9MCY20 is attributed to reductions in the demand for oil and a sharp decline in product prices during the pandemic. Additionally, the OMC industry was also adversely affected due to currency devaluation which resulted in high inventory and exchange losses. This can be seen in gross margins deteriorating further. Still at high levels, the company posted a decline in losses in 9MCY20 due to the decline in finance cost in 3QCY20, and a decline in exchange losses in overall 9MCY20.

HASCOL is still in trouble. With loss of over RS20 billion, the OMC is slated to post close to – if not higher – loss than incurred in 2019. The decline in HASCOL’s market share has been going since 2018, showing HASCOL’s falling volumetric sales – the largest decline has been witnessed in furnace oil, but the company has faced lower high-speed diesel and motor gasoline sales as well. Moreover, apart from the industry-wide contraction in volumes due to slower economic activity in 2019, drastic decline in volumes for HASCOL has been due to shortage of working capital to procure the product.

HASCOL has witnessed significant turbulence in its management team as well as board of directors. Which may be another reason for the delay in the announcement of the company’s results. To address the profitability crisis at HASCOL, the company underwent a reconstitution of the board as well as formulated a business revival and restructuring plan which included measures such as significant reduction in operating costs; recapturing and growing sales volumes and market share; disposal of non-core assets; raising working capital and additional equity to reduce leverage and addressing negative equity; converting debt into equity partially; and restructuring short term debt into long term facilities. Will these measures bring the company back to its feet? HASCOL continues to face the brunt of financial woes as retail fuel volumes continue to decline and FO is completely out of the picture in 8MFY21.

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