Hascol Posts A Loss of Rs. 11.16 Billion Despite Achieving New Capacity Milestone - Android

Hascol Petroleum recently became the largest oil marketing company in the private sector in terms of oil storage capacity in… Read More

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Hascol Petroleum recently became the largest oil marketing company in the private sector in terms of oil storage capacity in the country, and second after the public sector giant PSO. However, the company’s financial performance for the half-year 2019 has not been bright in terms of earnings.

The company announced its financial results for the Half-year that ended in June 2019, reporting a whopping loss of Rs. 11.16 billion. The company had booked a profit of Rs. 1.02 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. Major contributory 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.

This decline in volumes for the company came as a general downtrend in the consumption patterns in the country as well as increasing competition.

Hascol was also bitten by high exchange losses which is one of the main factors behind the reported loss during the period as a result of rupee’s depreciation.

The company reported net revenue of Rs. 86.03 billion which was down 30% as compared to Rs. 122 billion in the previous year. The cost of product sold was down to Rs. 86.31 billion as compared to Rs. 116 billion in the corresponding period. This resulted in a gross profit of just Rs. 107  million from a gross profit of Rs. 5.81 billion.

Overall operating expenses of the company grew to Rs. 3.52 billion from Rs 2.10 billion. The company’s other expenses were posted at Rs. 6.32 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. 2.47 billion, up by 33.72% as compared with Rs 1.85 billion and the finance cost was up by a whopping 509% which is 5 times higher than Rs. 435 million reported last year.

The company, during the period under review, paid income taxes worth Rs. 3.5 billion. It had got a tax relief of Rs. 587 million in the same period last year.

Hascol reported a loss per share of Rs. 56.09 from earnings per share of Rs. 5.16. Hascol’s script at the exchange closed at Rs. 36.77, down by Rs. 1.33 or 4.99% with a turnover of 1,229,500 shares on Thursday.

Increase in Authorized Capital

The Board of Directors of Hascol Petroleum Limited has adopted a resolution recommending an increase in the Authorized Capital of the company from Rupees 2.5 billion to Rupees 10 billion.

The decision has been placed for the approval of the shareholders at an Extraordinary General Meeting, so as to enable the company to subsequently announce and undertake a rights issue.

The major shareholders are evaluating all the options related to supporting the liquidity and financial situation of the company. The shareholders and management of the company have also been engaged with the government authorities at all levels to address and find solutions for the policy level issues which have adversely affected the oil marketing industry, read the notification.

This development came after the Board reviewed the extreme challenges to the prevailing business environment, particularly the impact of steep PKR devaluation, unprecedented increase in interest rates and drop in volumes on account of lower demand, all of which contributed to the half-yearly financial results not being as per previous expectations.

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