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BR Research

Hascol – the bleeding continues

  Hascol Petroleum Limited (PSX: HASCOL) recently announced its financial performance for the latest quarte
Updated 04 Nov 2019

 

Hascol Petroleum Limited (PSX: HASCOL) recently announced its financial performance for the latest quarter of 2019 and the company’s overall performance for the nine months in simple words is appalling especially after the company has been a key player in the OMC spaces with significant growth from 2014-2017.

Heavy exchange losses that plagued 1HCY19 financial performance decreased in 3QCY19 for HASCOL, which kept the overall impact in 9MCY19 controlled. But over rs6billion in other expenses in 9MCY19 versus none in similar period last year pulled the bottomline. This was due to loss incurred due to fluctuation in the international oil prices, markett volatility and local economic conditions coupled with massive devaluation of Pakistani Rupee causing an increase in product cost as per the notes to the quarterly accounts.

Hascol Petroleum Limited - unconsolidated 
Rs(mn) 9MCY19 9MCY18 YoY 3QCY19 3QCY18 YoY
Net revenue 111,973 184,304 -39% 25,551 62,197 -59%
Cost of sales 111,805 176,092 -37% 25,490 59,798 -57%
Gross profit 168 8,213 -98% 61 2,399 -97%
Distribution & Marketing 4,227 2,655 59% 1,252 995 26%
Administrative exp 821 648 27% 272 201 35%
Other  income 294 341 -14% 99 142 -31%
Other expense 6,320 0 0 0
Operating profit (10,905) 5,251 (1,364) 1,345
Finance cost 5,014 783 541% 2,364 347 580%
Exchange loss (net) 2,513 2,517 0% 33 663 -95%
Profit/(Loss) for the period (13,873) 1,507 (2,709) 479
EPS  - basic and diluted (69.69) 7.57 (13.60) 2.41
Gross margins 0.15% 4.46% 0.24% 3.86%
Net margins -12.39% 0.82% -10.60% 0.77%

On the other hand, HASCOL’s sales revenue also continued to decline, which was due to dwindling volumetric growth. Volumes fell from 646,000 to 210,000 metric tons in 3QCY19 on a year-on-year basis due to the shortage of working capital to procure the product, which also shot up the finance cost for the OMC. Also, Hascol Petroleum Limited has faced a significant decline in market share from 14percent in 1QFY19 to only 5 percent in 1QFY20 for petroleum products as all its reliance is on the import of petroleum products and has very minor allocation of local refineries.

However, the company is hopeful to turn things around soon by moving procurement largely to local refineries, and issuing right shares. The company recently announced that it will issue rights at 10 rupees in a bid to raise Rs8 billion, and rumour has it that Vitol – an oil trading company, which now holds 27.5 percent in Hascol is likely increase its shareholding in the company.