APL 9MFY25: lower profits, rising competition

Attock Petroleum Limited (PSX: APL)announced its financial results for the nine months ended March 2025, reflecting the broader trends and challenges faced by Pakistan’s oil marketing sector. The period was marked by declining sales volumes, lower petroleum prices, and intensifying competition, while APL also moved to diversify its operations

The OMC posted a 29 percent year-on-year decline in its earnings for 9MFY25 where earnings per share dropped to Rs 61.88 compared to Rs86.65 in the same period last year. The company’s net sales fell 12 percent year-on-year, driven by lower petroleum product prices and reduced sales volumes.

Gross profit also declined by 25 percent year-on-year, though quarterly gross margins showed slight improvement to 4.7 percent in 3QFY25 due to effective inventory management.

APL’s sales volumes were under pressure, with MS and HSD volumes declining 5 percent and 17 percent quarter-on-quarter in the latest quarter (3QFY25), respectively, mainly due to seasonal factors like the end of the Rabi sowing season and higher petroleum prices.

The company’s market share shrank by 1 percent year-on-year to 9 percent during 9MFY25 as competition intensified, particularly from Gas & Oil Pakistan (GO), whose aggressive market expansion significantly disrupted incumbents.

Despite continued support from finance income generated through investments in T-Bills, PIBs, and mutual funds, finance income declined by 11 percent year-on-year in 9MFY25 due to a sharp cut in interest rates. However, finance cots jumped by 27 percent year-on-year during the period.

In a strategic move to diversify and future-proof its business, APL, through its subsidiary Attock Energy (Private) Limited, has partnered with Hub Power Holdings Limited and Green Buy Energy (Private) Limited to develop Pakistan’s first electric vehicle (EV) charging and battery swapping infrastructure. This venture, structured as a joint company, aims to establish a network of EV stations powered by renewable energy, aligning APL with the global shift toward cleaner energy and sustainable transportation.

The broader oil marketing sector faced a tough environment during 9MFY25. Overall petroleum offtake rose by 4 percent year-on-year, supported by a crackdown on smuggled fuel, declining retail fuel prices, and recovering auto sales.

MS and HSD sales increased by 4 percent and 9 percent respectively, while Furnace Oil sales dropped sharply by 39 percent due to a shift away from FO-based power generation. Sector-wide gross margins remained slim at around 3.3 percent during the third quarter, reflecting inventory losses and weaker sales volumes. The competitive landscape became increasingly difficult.

Going forward, petroleum demand is expected to strengthen, supported by a gradual economic recovery and lower oil prices.

However, pressure from new entrants and regulatory delays, such as the pending OGRA margin hike, remain key risks. Inventory losses are likely to subside if oil prices stabilize, and the ongoing monetary easing could help reduce finance costs, offering some breathing room for sector profitability.