APL starts FY25 weak but sees growth ahead

After a solid FY24, where the company’s earnings grew by 11 percent year-on-year despite declining sales volumes and a challenging economic environment, FY25 began on a weaker note for Attock Petroleum Limited (PSX: APL). The company’s earnings dropped by 55 percent year-on-year, primarily due to significant inventory losses that impacted gross margins.

At the top line, APL’s revenues declined by over 17 percent year-on-year, driven by lower average retail prices of petroleum products and a 19 percent decrease in volumetric sales. Sales volumes for HSD, MS, and FO fell by 12 percent, 4 percent, and 62 percent, respectively, during 1QFY25. The combination of reduced sales and heightened inventory losses led to a 61 percent drop in gross profits, with the gross margin shrinking from 7.5 percent to 3.6 percent in 1QFY25.

Although operating expenses decreased, the finance costs rose by 30 percent year-on-year in 1QFY25, mainly due to higher markup charges on late payments during the period.

Despite the recent decline in earnings, the outlook for the OMC remains positive. APL has made significant progress in diversifying its portfolio, with planned investments in the LPG sector and EV charging infrastructure, signaling potential growth opportunities. It was recently announced that the company plans to expand its electric vehicle charging station network, petroleum retail outlet chain, and oil storage capacity in FY25.