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Attock Petroleum Limited's sales increased by 10.1% and its net profit by 22.6% in the first quarter of the ongoing fiscal year 2023-24 compared to the same period of the previous fiscal. The company achieved total sales of Rs136.4 billion and net profit of Rs5.25 billion for 1QFY24, thanks to increased average selling prices, margins, and interest income from petroleum products. The firm registered a gross profit of Rs10.27 billion, up by 2.83% from Rs9.99 billion in 1QFY23. The company attributed this rise to the increase in average prices. However, the gross profit margin declined to 7.53% in 1QFY24 from 8.06% in 1QFY23.

The company’s operating expenses dropped to Rs2.7 billion in 1QFY24 from Rs3.7 billion in the same period last year due to currency devaluation. The operating profit widened by 17.24% to Rs7.75 billion in 1QFY24 from Rs6.6 billion in 1QFY23. Attock Petroleum’s profit-before-tax jumped from Rs6.45 billion in 1QFY23 to Rs8.77 billion in the period under review, showcasing a growth of 35.99%. The net profit margin stood at 3.85% in 1QFY24 compared to 3.46% in the same period last year. The company reported earnings per share of Rs42.27 in 1QFY24 against Rs34.48 in 1QFY23.

Profitability ratios analysis

Net profit to sales ratio measures the profitability of a company relative to its revenue. Attock Petroleum's net profit to sales percentage over the six years from 2018 to 2023 remained volatile, ranging between 0.5% in 2020 and 5.01% in 2022. The company’s net profit ratio declined from 3.19% in 2018 to the lowest of 0.5% in 2020. However, this ratio improved in the subsequent years before declining to 2.63% in 2023.

The total shareholder return gauges the total return on investment of a company. In 2018, Attock Petroleum had a total shareholder return of 0.97%, which fell sharply to negative 34.95% in 2019, indicating a loss to shareholders. However, the company bounced back in 2020 and posted a shareholder return of 10.73%, which dropped to 7.39% in 2021. But the shareholder return kept on increasing in the following years reaching the peak of 31.01% in 2023.

Liquidity ratios analysis

Attock Petroleum’s current ratio remained above 1.2 over the six years, showcasing its stable liquidity position. The company owned ample current assets to cover its short-term liabilities over the years. The quick ratio remained volatile over the years, ranging between the lowest of 0.51 in 2022 and the highest of 1.05 in 2023. A quick ratio lower than 1 indicates a company has inadequate quick assets to meet its short-term obligations. The trend indicates the company increased its quick assets in 2023.

Summary of cash flows

The company used cash of Rs1.03 billion in operating activities in 2018 and Rs552.54 million in 2022. Whereas, it successfully generated cash of Rs2.99 billion in 2019, Rs7.4 billion in 2020, Rs5.6 billion in 2021 and Rs37.35 billion in 2023. This shows the company improved its revenue generation from operating activities.

The company utilised cash in investing activities from 2018 to 2021, but generated cash of Rs965.6 million in 2022 and Rs1.75 billion in 2023. The company continuously invested in financing activities over the six years. The company’s net cash and cash equivalent ranged between negative Rs6.6 billion in 2018 and Rs34.13 billion in 2023, implying an improvement in net cash generation.

Credit: INP-WealthPk