Ayesha Mudassar

The net loss and loss-before-tax (LBT) of Clover Pakistan Limited (CLOV) witnessed a substantial decline of 55.3% and 52.5%, respectively, in the first three months of the ongoing fiscal year (3MFY24), compared to the corresponding period of the last year, reports WealthPK. Quoting its quarterly report, the company posted a net loss of Rs2.7 million in 3MFY24 against Rs6.2 million in the same period last year.

The net sales declined by 77.8% to Rs6.5 million during 3MFY24, compared to Rs29.4 million recorded in 3MFY23. The reduction in revenue is attributable to economic slowdown which retarded the growth of various segments of the company. However, the company’s gross profit increased by 32.9% during the period under review.

Performance over the last four years

 Income Statement Analysis

During the years under consideration, CLOV's top line had been sliding down. The bottom line also didn't post any positive figures after 2019 and posted the highest magnitude of net loss, which tumbled in 2022. In 2021, CLOV's revenue shriveled by 5% year-on-year (YoY) as the company streamlined its business and trading activities during the year. The closure of two marts – Nishat and Sahar Mart – resulted in a gross loss of Rs24.07 million in the year. Furthermore, the net loss grew by 290% YoY in 2021 to Rs604.9 million with a loss per share of Rs19.43.

The year 2022 saw the greatest YoY decline of 75% in CLOV's top line due to a drop in the sales of industrial chemicals, equipment, and lubricants. The significant slowdown was due to high inflation, currency depreciation as well as political uncertainty. Besides, the plunge in expenses trimmed down the net loss by 82% YoY in 2022, which clocked in at Rs104.7 million with a loss per share of Rs3.52. The top-line plunge saw no respite in 2023. During the year, CLOV's top line further shrank by 21% YoY due to the slowdown of the economy.

The operating expenses contracted by 64% YoY, as fewer operations resulted in the rightsizing of human and other business resources. Other income considerably grew by over 11 times in FY23 maybe on account of the high discount rate which magnified the profit on deposit accounts.

Balance Sheet Analysis

The analysis of the company’s financial position showed that total assets and current liabilities have been declining at a staggering rate in all the years under review. However, the year 2022 witnessed the biggest contraction. During the year, the non-current and current assets saw a decline of 94.8% and 47% respectively. Furthermore, the current liabilities also declined from 85.2 million to 38.6 million.

Overall, the trend indicates a decline in both fixed and current assets, which might raise concerns about the company's financial stability and operational efficiency. Nevertheless, the reduction in current liabilities signifies effective management of short-term obligations, potentially mitigating some of the risks associated with the decline in assets.

About the company

Clover Pakistan Limited (CLOV) was incorporated in Pakistan as a publicly listed company in 1986. The company is engaged in the sale of consumer durables, food items, chemicals, and lubricants as well as the trade of gantry equipment's air/oil filters and other car care products. In addition, the company sells, distributes, and provides after-sale support for digital screens, gasoline dispensers, vending machines, and office automation equipment. The company was initially owned by Lakson Group; however, in 2017 it was acquired by Fossil Energy (Private) Limited.

Recent event

The Board of Directors of Clover Pakistan Limited has approved a deal with Fossil Energy (Private) Limited (FEPL) to become its exclusive dealer for managing, operating, and maintaining its Company Owned Company Operated Filling/Service Stations including agri sites.

Future outlook

The economy’s slowdown, unprecedented inflation and discount rate, depreciation, and the uncertain political situation will all continue to pose challenges in future and have an impact on the CLOV’s business activities. The company needs to undertake cost optimization to minimize its losses amidst lacklustre demand.

INP: Credit: INP-WealthPk