Clover Pakistan Limited (PSX: CLOV) was incorporated in Pakistan as a publicly listed company in 1986. The company is engaged in the sale of consumer durables, food products, chemicals, and lubricants as well as the import of trade of gantry equipment air/oil filters, and other car care products. The company’s activities also include marketing, distribution, and post-sales support of office automation products, vending machines, fuel dispensers, and digital screens.
As per the company notice published on the Pakistan Stock Exchange website on February 25, 2025, the company has now transitioned its core line of business from food products to petroleum products. CLOV will now be engaged in the business of selling, trading, and marketing all kinds of petroleum and petroleum products, oil, gas, hydrocarbons, petrochemicals, asphalt, and bituminous substances.
Pattern of Shareholding
As of June 30, 2024, CLOV has a total of 31.143 million shares outstanding which are held by 2287 shareholders. Associated companies, undertakings, and related parties have the majority stake of 46.24 percent in the company followed by the local general public holding 43.54 percent shares of CLOV. The remaining shares are held by other categories of shareholders.
Historical Performance (2019-24)
After posting a staggering rise in 2019, CLOV’s topline registered a decline until 2023. This was followed by a phenomenal growth in net sales recorded in 2024. CLOV’s bottom line didn’t post any positive figures after 2019. In fact, after 2020, the company couldn’t even record any operating profit. In 2021, CLOV registered the highest magnitude of net loss which tumbled thereafter. In 2024, CLOV posted a net profit. The margins reached their optimum level in 2019 and then entered a negative zone except for positive gross and operating margins in 2020 and a positive gross margin in 2022. In 2024, CLOV’s margins posted significant growth (see the graph of profitability ratios). The detailed performance review of the period under consideration is given below.
In 2019, CLOV’s topline boasted a whopping year-on-year growth of 691.12 percent. During the year, CLOV merged with Hascombe Business Solutions which provided a new line of business to the company i.e. office automation, vending machines, digital screens, etc. 2019 proved to be the best year in CLOV’s history as it touted an impressive revenue of Rs.1243.97 million which mainly came on the back of trading and services division of the company. The high cost of sales as well as operating expenses speak volumes of the company’s growing operations and the associated increase in the workforce. With a 1339.55 percent year-on-year increase in CLOV’s gross profit, the GP margin jumped up to 36.5 percent in 2019 from a GP margin of 20.1 percent in 2018. Operating profit also boasted a year-on-year rise of 826 percent, culminating in an OP margin of 25.63 percent in 2019 versus an OP margin of 21.9 percent recorded in 2018. The company has a very low gearing ratio and its finance cost mainly comprises bank charges which grew by 83.95 percent year-on-year to clock in at Rs.2.05 million in 2019. CLOV’s net profit rose by 967.41 percent year-on-year in 2019 to clock in at Rs.252.496 million with an NP margin of 20.3 percent versus an NP margin of 15 percent posted in 2018. The shares issued in lieu of amalgamation diluted the growth of EPS which posted 223.11 percent year-on-year growth to clock in at Rs.8.11 in 2019.
It seems like CLOV’s luck ran out in 2020. After tremendous growth witnessed in 2019, CLOV’s topline tumbled by 68.29 percent year-on-year in 2020 to clock in at Rs.394.43 million. This was due to the completion of one-off projects last year. Moreover, the outbreak of COVID-19 during the year also took its toll on the business operations of CLOV. Cost of sales shrank by 60.8 percent year-on-year in 2020 translating into GP margin of 21.55 percent. Administrative expenses declined by 46.41 percent year-on-year in 2020 due to lower payroll expenses as the number of employees reduced to 109 in 2020 from 132 in 2019. Furthermore, lesser traveling expenses, repair, and maintenance charges, as well as office and utility expenses on account of the lockdown imposed during the year, also kept administrative expenses in check-in 2020. Conversely, distribution expense posted 135.73 percent year-on-year growth in 2020 on account of higher payroll expense of the sales force as well as increased rent, rates, and taxes incurred during the year. Other income multiplied by 2018.60 percent year-on-year in 2020 on account of mark-up income on overdue receivables as well as profit on bank deposits. Robust other income couldn’t save operating profit from posting a steep fall of 94.38 percent year-on-year in 2020 with OP margin sliding to down to 4.54 percent. Finance cost grew by 48.51 percent year-on-year in 2020 to clock in at Rs.3.05 million. What literally turned the tables for CLOV and pushed its bottom line into net loss was the impairment of goodwill worth Rs.162.88 million in 2020. The company registered a net loss of Rs.155.218 million with a loss per share of Rs. 4.98 in 2020.
In 2021, CLOV’s revenue further contracted by 5 percent year-on-year to clock in at Rs.374.44 million. This was because the company streamlined its business and trading activities during the year. CLOV bid farewell to its FMCG business in 2021. Its two marts namely Nisht Mart and Sahar Mart were flooded with rainwater, resulting in the closure of both the marts. The sale of lubricants and the supply of goods and maintenance services to the energy sector also suffered due to COVID-19. Cost of sales went up by 28.78 percent year-on-year, resulting in gross loss of Rs.24.07 million in 2021. Distribution expense grew by only 2 percent year-on-year in 2021 due to rationalized business operations. Administrative expenses rose by 57.54 percent year-on-year in 2021 on account of stocks written off as the two parts of the company were full of fresh inventory and packaging materials that were completely destroyed due to rainwater. Other income fell by 94.16 percent year-on-year due to a decline in profit on saving deposits and also because there was no markup on overdue receivables in 2021. CLOV incurred an operating loss of Rs.175.10 million in 2021. The company also booked impairment on trade debts worth Rs.4.02 million in 2021. Moreover, the company entirely wrote off Goodwill as there was a massive slump in CLOV’s petrotech business with OMCs. Gestetner, photocopier, and office equipment businesses also extremely suffered due to the closure of government offices and embassies on account of COVID-19. CLOV’s net loss grew by 289.77 percent year-on-year in 2021 to clock in at Rs.604.999 million with a loss per share of Rs.19.43.
2022 saw the greatest year-on-year decline of 75 percent in CLOV’s topline which clocked in at Rs.93.27 million. This was due to a decline in sales of industrial chemicals, equipment, and lubricants as the local economy witnessed a significant slowdown due to high inflation, the high cost of doing business, the decline in the value of the local currency as well as political uncertainty. However, a 78.78 percent year-on-year plunge in the cost of sales resulted in a gross profit of Rs.8.72 million in 2022 as against a gross loss of Rs.24.07 in the previous year. GP margin clocked in at 9.34 percent in 2022. Distribution and administrative expenses slumped by 45.58 percent and 19 percent year-on-year respectively in 2022 due to a decline in headcount which reduced the payroll expense. Besides, there was a plunge in advertisement expenses, rent, rates and taxes, and legal and professional charges. The stock written off in the previous year also created a high-base effect for administrative expenses in 2022. Operating loss plummeted by 43.52 percent year-on-year in 2022 to clock in at Rs.98.89 million. There was a 23.88 percent rise in impairment on trade receivables during 2022. Yet the absence of impairment of goodwill trimmed down the net loss by 81.87 percent year-on-year in 2022 to clock in at Rs.109.71 million with a loss per share of Rs.3.52.
In 2023, CLOV’s topline slid by 36.3 percent year-on-year to clock in at Rs.59.41 million. This was because the slowdown of the economy adversely affected the industrial and chemical sectors. Furthermore, the company’s chemical business was also severely affected due to fluctuations in global prices. High inflation didn’t let the cost of sales drop comparably resulting in a gross loss of Rs.8.19 million in 2023 versus a gross profit of Rs.8.72 recorded in 2022. Distribution expense plunged by 25.52 percent in 2023 due to a sizeable decline in payroll expense of sales force, advertising budget, and traveling expenses. Distribution expense would have been much lower had the company not incurred significantly higher operating lease rentals for rented properties. 43.48 percent lower administrative expense incurred by CLOV in 2023 was due to widespread layoffs over the year leaving only 4 employees in 2023 versus 42 employees in 2022. The company recorded 201.11 percent higher other income in 2023 on the back of higher gain on the sale of fixed assets, reversal of accumulated depreciation as well as higher profit on bank deposits. CLOV’s operating loss tumbled by 29.25 percent in 2023 to clock in at Rs.69.96 million. Finance cost (or bank charges) nosedived by 97.93 percent in 2023 to clock in at Rs.0.016 million. CLOV’s net loss slumped by 35 percent year-on-year in 2023 to clock in at Rs.71.249 million with a loss per share of Rs.2.29.
After four successive years of net losses, 2024 proved to be a year of fortune for CLOV. The company registered 2950.40 percent higher net revenue to the tune of Rs.1812.30 million in 2024. This was due to a staggering rise in the sale of petroleum products in 2024. In 2024, petroleum products account for 98 percent of the company’s net sales. CLOV registered a gross profit of Rs.248.27 million in 2024 with a GP margin of 13.7 percent. Distribution expense tumbled by 89.63 percent in 2024 as no rent, rates & taxes, traveling charges, and payroll expenses were incurred during the year. Administrative expense ticked up by 12.59 percent in 2024 due to higher rent, rates & taxes incurred as well as advances written off during the year. The company also recorded 74.80 percent lower other income in 2024 as it didn’t recognize any gain on the sale of fixed assets and profit on bank accounts, unlike last year. Other expenses mounted by 805 percent in 2024 as the company did provisioning for WWF and WPPF during the year. CLOV registered an operating profit of Rs.185.68 million in 2024 with an OP margin of 10.25 percent. Finance costs (bank charges) slid by 68.75 percent in 2024. CLOV registered a net profit of Rs.192.326 million in 2024 with EPS of Rs.6.18 and an NP margin of 10.61 percent.
Recent Performance (1HFY25)
During the first half of FY25, CLOV registered 15610.72 percent year-on-year growth in its topline which clocked in at Rs.2072.72 million. This came on the back of a massive rise in the sale of petroleum products in 1HFY25. The cost of sales surged by 34158.42 percent in 1HFY25. This resulted in a gross profit of Rs.321.08 million in 1HFY25 versus a gross profit of Rs.8.08 million recorded in 1HFY24. Despite the stunning rise in gross profit in absolute terms, the GP margin dipped from 61.24 percent in 1HFY24 to 15.49 percent in 1HFY25. Administrative & selling expenses mounted by 502.69 percent in 1HFY25 due to an increase in sales volume and a transition of the business line towards petroleum products which might have required additional resources and an increased marketing budget. Other expenses escalated by 2442.22 percent to clock in at Rs.13.73 million in 1HFY25. This predominantly included provisioning for WWF and WPPF. CLOV recorded an operating profit of Rs.198.22 million in 1HFY25 versus an operating loss of Rs.8.02 million registered during the same period last year. OP margin clocked in at 9.56 percent in 1HFY25. After accounting for taxation, net profit stood at Rs.171.774 million in 1HFY25 versus a net loss of Rs.8.269 million recorded in 1HFY24. CLOV recorded EPS of Rs.5.52 in 1HFY25 versus a loss per share of Rs.0.27 posted in 1HFY24. NP margin was recorded at 8.29 percent in 1HFY25.
Future Outlook
The strategic partnership with Fossil Energy Private Limited (FEPL) will benefit CLOV as the former plans to construct 50 filling/service stations over the next three years with CLOV appointed as a sole dealer for its site operations. This will offer a tremendous opportunity for CLOV to revive its financial performance and market presence. Furthermore, the change in the company’s line of business from food products to petroleum products will also continue to result in phenomenal growth in topline and profitability as it did in 2024 and the first half of the ongoing fiscal year.
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