AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,944 Increased By 65.8 (0.96%)
BR30 22,827 Increased By 258.6 (1.15%)
KSE100 67,142 Increased By 594.3 (0.89%)
KSE30 22,090 Increased By 175.1 (0.8%)

Profits for Hi-Tech Lubricants (PSX: HTL) have come under stress since FY18 after a period of continued. The firm’s earnings slipped despite growth in revenues where currency depreciation and expansion plans have increased the associated costs, pulling down margins.

FY19 went one step further as the company witnessed slowing net revenues as well, while the earnings dipped into negative. The revenues remained static due to the seasonal decline in volumes in the first quarter along with slowing economy as a whole. HTL’s quarterly Director’s Report highlights that while over time lubricants demand has some elements of inelasticity, in the short term it can be impacted by consumer and retailer behavior in response to macroeconomic issues.

Hi-Tech Lubricants Limited
Rs (mn) FY19 FY18 YoY
Net sales 9,431 9,254 2%
Cost of sales 8,137 7,325 11%
Gross profit 1,294 1,928 -33%
Distribution cost 835 636 31%
Administrative cost 432 379 14%
Other exp 104 63 64%
Other income 114 108 5%
Profit/(loss) from operations 38 959 -96%
Finance cost 235 83 185%
Profit/(loss) before tax (197) 877  
taxation 237 322 -26%
Profit/(loss) after tax (435) 554  
Earnings/(loss) per share -3.75 4.78  
       
Gross marin 13.72% 20.84%  
Operating margin 0.40% 10.36%  
Net margin -4.61% 5.99%  
Source: PSX    

While details are not out yet, the previous quarterly reports point towards a recovery in Passenger Car Motor Oil (PCMO) segment which represents the bulk of the HTL’s revenues. Whereas, the diesel segment has remained weak due to reduced trucking of goods and trucking of fuel caused by the furnace oil curtailment.  The company’s gross profit declined due to higher inflation and hence higher commodity prices. On the other hand, increase in distribution and marketing expenditure due to expansion plans along with higher administrative costs dragged the earnings for FY19. At the same time higher exchange losses due to currency depreciation and staggering growth in finance cost due to higher interest rate cost resulted in HTL posting a loss after tax in FY19 versus a profit in FY18.

The company had initiated a two-phased expansion plan in 2016 for HTL Express centers, HTL Stations, and HTL Mart. The company has made progress in Phase 1 of the expansion plan, which was the development of HTL state of the art retail outlets across Pakistan with multiple services and technical support. After opening retail outlets in Karachi and Lahore, has been looking to replicate the same model in other big cities of the country such as Rawalpindi/Islamabad.

Phase 2 of the plan was about setting up an OMC and a network of fuel stations in different parts of Pakistan. Under this expansion phase, a total of 360 fuel stations have been expected to be laid out across the country in the coming years. Construction of fuel depots had been planned in multiple parts of the country to support the operations of HTL Stations and the company has also been granted renewable license to operate first oil storage depot located at Sahiwal, while the update on the overall progress in this phase is still awaited.

Comments

Comments are closed.