Attock Petroleum Limited November 19, 2013 RECORDER REPORT 0 CommentsE-mailPrintPDF Attock Petroleum Limited was incorporated in 1998 and is engaged in the downstream petroleum sectors business. Belonging to the only fully integrated Attock oil group, Attock Petroleum Limited (APL) was the fourth oil marketing company to be granted the marketing license. It serves both the local as well as the international clientele. As an oil marketing company, products of Attock Petroleum Limited include lubricants and commercial and industrial fuels. APL markets and supplies fuels to manufacturing industry, armed forces, power producers, government/semi-government entities, FMCG companies, developmental sector, agricultural customers, etc. The company also offers a range of lubricants which include both automotive and industrial grades blended with base oils and additives. Its main commercial and industrial fuels marketed include: HSD, MS, Jet fuel, kerosene oil, asphalt, furnace oil, light diesel oil and lubricants. It has an extensive storage transportation & retail outlet network that supplements its production range. It has over 350 retail outlets. Besides facilitating export of naphtha to the Middle East, Far East and South Asia, APL has also become a major exporter of petroleum products to Afghanistan. INDUSTRY HIGHLIGHTS FY13 saw only a three percent increase in oil trade in the country. The imposition of certain restrictions on the export of petroleum products to Afghanistan was one of the key reasons that affected the profitability of the oil marketing companies in terms of foreign exchange earnings. The muted sale volumes came mostly from the decrease in furnace oil despite the rising motor spirit (petrol) volumes. The prime reason behind petrol demand escalating during the period was the shortage of gas and the resultant CNG outages. And the chief reason behind low furnace oil demand was lower consumption of fuel by the power sector due to the circular debt. Amongst the positive highlights for the oil industry were the partial settlement of the circular debt by the government in June 2013 and the nominal increase in the margins of the regulated products. Amid such headwinds, Attock Petroleum Limited was able to increase its market share in the OMC sector from 9.1 percent in FY12 to 9.3 percent in FY13. APL FY13 With 52 new outlets, the company witnessed a commendable growth in the number of retail outlet during FY13. These add up to a total of 414 retail outlets for the company by the June 2013. The increase in revenues was result of higher international oil prices and increase in volume sold. However, stiff competition led to significant increase in operating expenses in order to maintain market share. APL registered a slight improvement in product margins during the period, which coupled with improved sales volume led to a reasonable increase in revenue. During FY13, the core revenues of the oil marketing company moved up by eight percent year on year. Though the sales could have benefited largely from the rise in demand for petrol due to the CNG shortage and the pricing issue in the country, the lacuna in its motor spirit sales was the ban on the export particularly to Afghanistan. Overrun in administrative expenses, wiped out the good work done at the top, as administration costs surged. Finance cost was understandably on the higher side, as the circular debt menace spared no one in the entire energy chain. APL, however, managed the situation well, with the finance income more than compensating for the financial charges during the period. The bottom line of Attock Petroleum Limited diluted due to higher operating expenses, and unlike the gross margins which improved slightly year on year, the net margin tanked; overall, in FY13 companys earnings contracted by five percent year on year. The dip in after tax earnings also reflects a slightly higher effective tax rate for FY13 compared to that of last year. The pre-tax earnings dipped only slightly, indicating that the APL could well revive the fortunes in the near future. Also, the company should have seen better Asphalt sales since infrastructural activities gain traction in the election year. Call it a misfortune or the victim of the law-and-order situation lately, sales revenue has not been able to gain from it due to lack of such developmental activities. OUTLOOK Circular debt has been a core source of concern for the oil marketing company. With some settlement and with the company now out of the Chevron acquisition race, other income is expected to remain strong in the near future. The revenues and the profits might not be whopping this season, but the company has a few reasons to be optimistic and cheerful; the future of FY14 lies in the petroleum product sales; going by the companys historical trend and with the Chevrons acquisition off the firms list, APL will be able to continue its retail expansion with healthy cash balances. Expectations about higher petrol and better asphalt sales in the coming months are the streaks of optimism for APL. The furnace oil off take offers a positive side for the OMC sector. The company also has plans for up-gradation of existing and setting up of new Bulk Oil Terminals at strategic locations. Further, it plans improvement in its retail presence and distribution channel for its lubricants division in order to penetrate further into new business segments.
Posted on: Tue, 19 Nov 2013 02:46:12 +0000
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