Hascol goes aggressive on retail

To begin with, strong international backing from Vitol has helped Hascol Petroleum Limited (PSX: HASCOL) in boosting its supply chain, receiving better and flexible payment terms as well as in getting price discounts on imports. The OMCs continued on its growth trajectory in CY17 where changing domestic oil market dynamics and rising white oil demand made the firm expand its supply chain network to become the second largest OMC in Pakistan in terms of volumes after PSO.

The same growth pattern continued in the first quarter of 2018; HASCOL saw a staggering increase in its top-line by around 57 percent, year-on-year. This increase was led largely by increase in sales volumes, which rose by 32 percent in 1QCY18, backed by higher oil prices. Sales volumes increased by 39 percent, year-on-year in CY17. And even amid higher cost of sales, selling and distribution costs, and administrative costs, Hascol Petroleum’s earning increased by 94 percent, year-on-year in 1QCY18.

HASCOL has been focusing on the retail fuels and retail side expansions. In the first three months of 2018, the OMC commissioned 27 new retail sites, taking the total tally from 495 as of December 2017 to 522 as of March 2018 with 15 in Punjab, 10 in Sindh and 2 in KPK. It plans to commence around 100 new retail outlets in 2018.

HASCOL also ventured into starting its chemical business for importing bulk chemicals and supplying to end user in 2017; and during the year, HASCOL also announced right issue of 20 percent to fund the upcoming projects like development of storage facilities, retail outlets and lube oil and grease blending plant. The firm is constructing its own lube oil blending plant and is adding storage facilities at Port Qasim to enter into aviation fuel and LNG marketing businesses.

The first phase of these storage facilities and the lube and grease blending plant are expected to be operational by June 2018. Apart from Hascol Terminal, it is expanding its storage capacity by around 110KT, which will take its cumulative storage capacity around 450KT.

While these projects are likely to be a source of growth for the firm, the automobile sector complemented by CPEC related transportation activities are also drivers of growth for HASCOL as they increase the white oil demand.