KARACHI: Oil marketing company Hascol’s profit before tax declined 49% to Rs128 million in the July-September quarter of 2015 as it took the hit of inventory loss, analysts said.
But the latest listed oil company was able to prop up its bottom line with a deferred tax adjustment of Rs108 million, which shore up its net profit to Rs236.9 million, compared to Rs196 million in same period of last year.
“As per our assessment, they took an inventory loss of Rs150 million,” said Shajar Capital Analyst Yawar Uz Zaman. “They have a fairly well controlled operation but this risk comes with investment in storage facilities.”
Inventory loss occurs when the price of petroleum products stored in tanks decreases. The retail price is announced by the government. Hascol was, however, able to improve its gross margin to 3.2% from 2.1% in the same period last year, indicating higher throughput.
A good performance in previous quarters still helped Hascol post a 47% rise in its nine-month January-September 2015 profit, which comes to around Rs752 million.
Shahbaz Ashraf of Arif Habib Limited Research was satisfied with company’s performance. “As a matter of fact, market was expecting a higher inventory loss than what is reflected in its financial statement.”
Without speculating too much on the subject, he said the deferred taxation was probably because of some capital expenditure the company undertook during the year.
Published in The Express Tribune, October 30th, 2015.
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