Attock Petroleum (APL) has posted profit after tax of PKR1.2 billion (EPS: PKR10.03) for 2QFY23, down 71% QoQ and 70% YoY. The result came in much higher than the initial expectations of LPS of PKR3.33. The deviation largely stemmed from lower-than-expected inventory losses. This takes 1HFY22 net profits to PKR5.5 billion (EPS: PKR44.51). The company announced interim cash dividend of PKR12.5/share.
Net Sales were down 8% QoQ, but up 40% YoY to PKR113.8 billion in 2Q. The sequential decline in topline is attributable to overall reduction in sales volumes by 10% QoQ, where FO volumes fell by 37% QoQ. This has also reduced APL’s overall market share to 8.6% in 2QFY23.
Gross margins reduced to 1.7%, due to inventory losses and delay in upward revision of OMC margins. Lower-than-expected inventory losses led to a major deviation.
Opex were down significantly by 61% QoQ to PKR1.4 billion likely owing to the absence of excessive exchange losses that the company realized in 1QFY23. Analysts await detailed financials for more clarity.
Among other line items 1) finance income witnessed a massive surge of 90% QoQ , due to increase in interest rates and higher short term investments of PKR22.2 billion (as per 1QFY23 financials), and 2) the company has booked ETR of 30% in 2QFY23 similar to the same period last year.
APL continues to post impressive results despite economic headwinds and declining international oil prices. This is due to efficient inventory management, dominance in non-regulated products like Asphalt and elevated other income.
Looking ahead, subdued local demand on the back of higher taxes, PKR devaluation and inflationary pressures will likely suppress margins and earnings of the company.
The recent revision of OMC margins, coupled with better inventory management and elevated other income will provide some respite to APL’s bottom-line.