Burshane LPG (Pakistan) Limited (PSX: BPL) was incorporated in Pakistan as a limited liability company. The company is engaged in the storing, marketing, and trading of Liquefied Petroleum Gas (LPG) throughout Pakistan and trading of low-pressure regulators (LPR).

Pattern of Shareholding

As of June 30, 2024, BPL has a total of 22.489 million shares outstanding which are held by 1144 shareholders. BPL’s directors have a majority stake of 54.82 percent stake in the company followed by the local general public holding 30.08 percent of its shares. National Bank of Pakistan accounts for 8.12 percent of the outstanding shares of BPL while 5.94 percent of its shares are held by CDC. The remaining shares are held by other categories of shareholders.

Financial Performance (2019-24)

Since 2019, BPL’s topline dipped thrice i.e. in 2020, 2023 and 2024. During the period under consideration, BPL registered net profit only in 2019 and 2022. Its gross margin rode a downhill journey until 2021 and then recovered thereafter. On the contrary, its operating and net margins stayed in the positive territory only in 2019 and 2022. The detailed performance review of the period under consideration is given below.

In 2019, BPL’s net sales grew by 11 percent year-on-year on the back of increased prices whereas the quantity sold by the company slumped by 9.7 percent year-on-year to clock in at 38,358 MT on account of lesser supply from local refineries and also the expiry of sales contract with NRL. During the year, the company also imported 12.8 percent lower LPG which clocked in at 12,447 MT. During 4QFY19, BPL’s margins turned negative as there was a skimpy demand from local consumers while the local refineries increased their supply significantly during the period and sold at less than OGRA-approved prices. This resulted in 7.38 percent thinner gross profit registered by the company in 2019 with GP margin sliding down from 7.95 percent in 2018 to 6.63 percent in 2019. During the year, BPL was able to cut down its administrative expense by 1.95 percent as it undertook cost control measures in the areas of vehicle maintenance as well as traveling & conveyance. Distribution expenses escalated by 7 percent year-on-year in 2019. BPL was also able to register a 20 percent rise in its other income during 2019 as its liability for cylinder and regulatory deposits were written back during the year. Operating profit slipped by 16.39 percent year-on-year in 2019 with OP margin shrinking from 2.86 percent in 2018 to 2.15 percent in 2019. BPL was also able to cut down its finance cost by 83.68 percent in 2019 as the company restructured its demand finance facility with NBP under which the balance payment of Rs.165 million had to be paid over the next seven years. As a consequence of loan restructuring and reduced finance costs for the year, BPL was able to post a 31.95 percent year-on-year rise in its net profit in 2019 which clocked in at Rs.25.857 million. EPS grew from Rs.0.87 in 2018 to Rs.1.15 in 2019. NP margin also improved from 0.67 percent in 2018 to 0.796 percent in 2019.

In 2020, BPL registered a 20.54 percent downtick in its net sales. This was on account of an 18 percent year-on-year decline in the company’s sales volume which clocked in at 31,465 MT as there was a huge influx of imported LPG in the market. Another reason was the withdrawal of participants from the distribution chain on account of the government documentation drive. COVID-19-related disruptions are also to be blamed for the reduced sales volume reported by BPL in 2020. Due to a slowdown in sales, the company imported 5652 MT of LPG, down 54.59 percent year-on-year. Cost of sales also slid by 19.31 percent year-on-year in 2020. This pushed the company’s gross profit down by 37.86 percent in 2020 with GP margin slipping to 5.2 percent. Administrative expense and distribution expense surged by 4.67 percent and 2.65 percent respectively in 2020 mainly on account of depreciation, advertising and publicity, transportation as well as freight & octroi charges incurred during the year. As a consequence, BPL posted an operating loss of Rs.26.01 million in 2020. Finance costs mounted by a massive 810.69 percent in 2020 resulting in a net loss of Rs.109.829 million with a loss per share of Rs.4.88.

In 2021, the company witnessed a negligible 0.34 percent year-on-year growth in its topline despite the fact that its volume grew by 4.6 percent year-on-year to clock in at 32,925 MT. This was due to price reduction due to ample availability of imported LPG in the local market amid sluggish demand due to COVID-19-related protocols. Lower prices resulted in 74.97 percent shrinkage in BPL gross profit in 2021 with GP margin diminishing to 1.29 percent. Administrative expenses spiked by 11.82 percent year-on-year in 2021 as legal charges went up during the year on account of complaints lodged by the Investigation & Intelligence - Inland Revenue (I&I IR) department and also because of general inflation. Conversely, a drop in hospitality charges as low LPG filling was taking place at third-party plants culminated in a 5.88 percent plunge in distribution cost in 2021. BPL registered an operating loss of Rs.137.14 million in 2021. Due to monetary easing, finance costs dwindled by 39.42 percent in 2021. Despite this, BPL’s net loss magnified by 9 percent year-on-year in 2021 to clock in at Rs.119.754 million with a loss per share of Rs.5.33.

BPL’s sales volume which showed a slight uptick in the previous year, dropped by 4.2 percent year-on-year in 2022 to clock in at 31,548 MT. However, there was a staggering 73.45 percent year-on-year rise in the company’s top line in 2022 due to an increase in prices. Gross profit multiplied by over 396 percent in 2022 with GP margin marching up to 3.697 percent. Administrative expenses plummeted by 7 percent in 2022 due to a reduction in litigation charges related to the complaint lodged by I&I IR. Distribution expense posted a 3.8 percent growth in 2022 due to higher freight charges. Gain on restructuring of loan during the year drove up BPL’s other income by 127.89 percent in 2022. BPL posted an operating profit of Rs.40.31 million in 2022 with an OP margin of 0.897 percent. Loan restructuring resulted in a 49.39 percent downtick in the company’s finance cost for the year. This resulted in a net profit of Rs.26.839 million in 2022 with EPS of Rs.1.19 and an NP margin of 0.6 percent.

BPL’s topline shrank by 21.38 percent year-on-year in 2023. This was on account of a 1.9 percent lower sales volume which clocked in at 30,960 MT in 2023. The higher availability of imported LPG took its toll on the sales volume of BPL during the period. However, higher international crude oil prices improved the company’s GP margin to 4.28 percent in 2023, despite a 9 percent year-on-year diminution in gross profit. Administrative expenses stayed constant despite inflationary pressure due to lower legal charges incurred during the year. Distribution expense also slumped by 4.5 percent year-on-year in 2023 due to lower hospitality charges due to low LPG filling at third-party plants. Gain on restructuring of loan which BPL booked last year created a high-base effect, resulting in a 54.69 percent plunge in other income in 2023. BPL posted an operating loss of Rs.7.34 million in 2023. Finance cost magnified by 315.92 percent in 2023. As a consequence, BPL posted a net loss of Rs.66.151 million in 2023 with a loss per share of Rs.2.94.

In 2024, BPL recorded a 32.72 percent year-on-year decline in its net sales. This was the result of a 61.7 percent lower sales volume which clocked in at 11,867 MT in 2024. This was on account of reduced local LPG quota as well as low demand for LPG due to high inflation and affordability factors. The cost of sales dropped by 33.79 percent in 2024. While gross profit in absolute terms eroded by 8.71 percent in 2024, GP margin improved to 5.8 percent. Administrative expenses inched up by 1.4 percent in 2024 mainly on account of donations paid during the year. Distribution expense slid by 2.55 percent in 2024 due to lower payroll expenses of the distribution network as well as low hospitality charges owing to thin demand. Other income mounted by 115.95 percent in 2024 mainly on account of gain on disposal of property, plant, and equipment, liability for cylinder deposits and regulator deposits written back as well as higher hospitality and storage income and recovery against cylinder replacement. Other expenses also surged by 219.79 percent in 2024 due to allowance booked for credit loss. This translated into an operating loss of Rs. 0.43 million in 2024. Finance costs grew by 22.91 percent in 2024. During the year, the company restructured its loan with NBP whereby its outstanding long-term loan of Rs.154 million has been restructured to run a finance facility. BPL’s gearing ratio stood at 68.23 percent in 2024 versus the gearing ratio of 65.64 percent recorded in the previous year. The company recorded a net loss of Rs.73.677 million in 2024, up 11.38 percent year-on-year. This culminated in a loss per share of Rs.3.28 in 2024.

Future Outlook

With the lack of indigenous pipeline gas, LPG has become an alternative solution for household consumers. However, demand from industries has remained low of late due to subdued economic activity and the shutdown of industries.