Hascol Petroleum announced its financial results for the nine-month period that ended on September 30, 2019. The company’s financial performance in 2019 has not been bright in terms of earnings.
It reported a whopping loss of Rs. 13.87 billion. The company had booked a profit of Rs. 1.5 billion in the same period last year.
The economic downtrend and reduction in the overall market size have impacted the company’s profitability. During the period under review, the overall oil industry remained under pressure amid high-interest cost and low demand.
The volumes of the company fell drastically from 646,000 Metric Tons to 210,000 Metric Tons as compared to the corresponding quarter of 2018. The major reason for this decline was the shortage of working capital to procure product.
Hascol has a reliance on the import of petroleum products and have very minor allocation of local refineries. The exchange losses and inventory losses combined with the unperformed cargoes in Q1 have badly affected the working capital cycle of the company which resulted in short term borrowings of Rs. 43 billion, resulting in huge financial charges of Rs. 4.9 billion for overall nine months.
Major contributors of this extraordinary loss are lower gross profit due to dip in sales volume, inventory losses and the substantial increase in finance cost due to a sharp rise in the discount rate by SBP, and higher average borrowing levels compared to the same period last year.
The company reported net sales of Rs. 111.97 billion which was down by 40% as compared to Rs. 184.30 billion in the previous year. The cost of product sold was down to Rs. 111 billion as compared to Rs. 176 billion in the corresponding period. This resulted in a gross profit of just Rs. 168.31 million from a gross profit of Rs. 8.21 billion.
It has reported an operating loss of Rs. 10.90 billion as compared to an operating profit of Rs. 5.25 billion. The rise in exchange loss and an increase in finance cost made a huge dent in the earnings of the company. The exchange losses were posted at Rs. 2.51 billion, and the finance cost was up by a whopping 540% (more than 5 times increase) to Rs. 5.01 billion as compared to Rs. 782 million.
It reported a loss per share of Rs. 69.69 as compared to earnings per share of Rs. 7.57.
Vitol Group to Raise Stake in Hascol
Vitol Group Ltd. is poised to increase its stake in Pakistan fuel retailer Hascol Petroleum Ltd, reported Bloomberg.
According to the report, the oil trader intends to remain a minority shareholder after the increase, which it will do so through Hascol’s planned rights issue.
Vitol, which now holds 27.5% in Hascol, has gradually increased its stake since first acquiring 15% in April 2016. A Vitol spokeswoman in London declined to comment. An official from Hascol didn’t immediately respond to a request for comment either.
Hascol announced it will issue rights at 10 rupees in a bid to raise 8 billion rupees, the company said in an exchange filing on Wednesday. The retailer last month announced it’s looking to raise 6 billion rupees ($39 million) through the rights issue.
isn’t it confusing?
First you wrote:
“The economic downtrend and reduction in the overall market size have impacted the company’s profitability.”
And then you mentioned:
“The volumes of the company fell drastically from 646,000 Metric Tons to 210,000…The major reason for this decline was the shortage of working capital to procure product”
It must be. As a layman I can say that they have no control over their petrol pumps. Petrol pump’s managers and workers are thieves. So i usually avoid HASCOL