APL 1HFY25: Earnings decline amid market shifts

Attock Petroleum Limited (PSX: APL) announced its financial performance for 1HFY25 recently, and the company reported a net profit of over Rs5 billion in 1HFY25, which was a 34 percent year-on-year decline. The decline in the company’s earnings was led by a fall in the top line.

APL’s net sales fell 15 percent year-on-year, primarily due to lower average retail prices of petroleum products and a reduction in Motor Spirit (MS) and Furnace Oil (FO) sales by around two percent and 60 percent year-on-year, respectively. However, diesel sales increased by 6 percent year-on-year during the period. In 2QFY25, APL’s earnings grew by 8 percent year-on-year driven by improved margins. The company announced an interim cash dividend of Rs12.50/share for 2QFY25.

Gross margins declined in 1HFY25 by 144 basis points 3.48 percent, while in 2QFY25, margins improved to 3.37 percent from 2.29 percent in 2QFY24 due to inventory gains. Operating expenses increased by 7 percent year-on-year, driven by higher depreciation charges, while finance costs rose by 29 percent due to a higher markup on late payments. Conversely, finance income decreased by 8 percent year-on-year, reflecting lower earnings from cash balances.

A look at 1HFY25 for the industry shows that the overall petroleum sales in the OMC sector increased by 4 percent year-on-year driven primarily by higher High-Speed Diesel (HSD) consumption. The market is becoming increasingly competitive, with PSO and APL losing market share to smaller OMCs, which are expanding their footprint. On a company-wide basis, APL’s sales declined by 11 percent year-on-year in 1HFY25, with its market share reducing to 8.6 percent from the previous 10.1 percent. Looking ahead, HSD demand is expected to remain strong, supported by economic recovery, infrastructure projects, and a continued crackdown on smuggling. However, MS demand may remain volatile, influenced by consumer purchasing power and broader economic conditions. FO consumption is expected to continue declining due to a structural shift toward alternative energy sources.