Difference in gross and net revenues for APL was noticeable due to higher sales tax expense, and APL’s net revenues remained flattish in 1HFY20 as well as 2QFY20, where volumetric sales saw a decline of over 2 percent in 1HFY20, and higher pump prices only helped the revenues remain intact.

Apart from the weakness in the topline, higher cost of sales on account of inventory losses particularly in 2QFY20 squeezed APL’s gross margins. Inventory losses are expected to have come from furnace oil. Furnace oil sales by the OMCs have seen a decline due to it being phased out, which is one factor behind lower inventory gains. However, the recently witnessed growth in FO sales has been offset by nosediving furnace oil prices globally, which could be one factor behind inventory losses in the latest quarter.

APL’s net profits were down by 24 and 36 percentyear-on-year, in 1HFY20 snd 2QFY20, respectivley. Despite the support from the other income, what dented the OMC’s earnings further were the higher finance cost amid high interest rate environment; share of losses from associates that is likely to have come from losses incurred by the Attock Refinery and Natiaonal Refinery during the same period; and impairment losses that APL booked on its short term investments.