HTL in FY22

After the significant growth in revenues seen in FY21, Hi-Tech Lubricants Limited(PSX: HTL), in the recently announced financial performance for FY22, depicts continued growth in topline. The company’s financial performance that remained under duress in FY19 and FY20, took a rebound in FY21 with growth in topline and massive increased inconsolidated profits. While revenues continued to grow in FY22 for HTL, the growth in consolidated earnings slipped by 10 percent year-on-year during the year.

Growth of 67 percent year-on-year in consolidated topline in FY22 came from higher prices and higher sales volumes due to demand increase from both the lubricant segment and the petroleum segment. In the lubricants segment, the group’s wholly owned subsidiary, which is also the blending plant – Hi-Tech Blending (Private) Limited helped the company increase sales volumes in FY21 as well as FY22. The blending plant has been involved in the local blending of its in-house lubricants under the brand name ZIC. Factors in the petroleum segment that spurred volumetric sales of retail fuels like petrol and diesel in FY21 were resumption of economic activity, increased trade, higher agriculture activity, curb on illegal trade of fuel, and increased automobile sales - as well as improvement in prices. However, some of these factors were tepid in FY22 – especially in the second half of the fiscal year due to weakening economic growth, falling demand and rising inflation.

And while consolidatedgross profit for HTL also posted decent growthof over 65 percent year-on-year in FY22, the company’s consolidated net earnings depicted a decline of 10 percent year-on-year due to higher other expenses on account of exchange losses, and higher finance expense due to higher interest rates. HTL’s gross margins were stable in FY22, but net margins on a consolidated basis were down from 6.5 percent in FY21 to 3.5 percent in FY22.

Hi-Tech Lubricant Limited’s growth has been hinged on the blending plant’s performance. Last year, the group had presented its intention to further expand its blending facilities with additional blow molding machines, storage tanks and filling lines. Besides strong direct marketing of its brand ZIC, the company has also been looking into expanding beyond borders and diversifying into plastic packaging industry.

As far as HTL’s setting up of an OMC is concerned, the company is obtained a further extension in the provisional license up till Dec-2023 from OGRA. Recall that the last time it had submitted the request for extension of provisional license to OGRA was 2020, which was initially granted 2016.