Oil sales show continuous decline for 8th consecutive quarter

KARACHI: The oil sales witnessed continued downward trend in first quarter of fiscal year 2019/2020 for 8th consecutive quarter and posted fall of 13 percent Year on Year (YoY).

Major decline was witnessed in Furnace Oil (FO) and Hi Speed Diesel (HSD) to the extent of 29 percent and 16 percent YoY, respectively, analysts at Topline Securities.

Quarterly sales in absolute terms clocked in at 4.4 million tons during 1QFY20, lowest in last 26 quarters. Excluding FO, sales are lowest in last 14 quarter low.
Diesel sales continues to fall (down 16 percent YoY) for 6th consecutive quarter on the pretext of slowdown in economy, slower transportation activities and smuggling from Iranian border.

FO sales fell by 29 percent YoY due to its lower requirement in power generation after availability of relatively cheaper fuels like RLNG/coal.

During Sep 2019, oil sales went down by 19 percent YoY. On MoM basis, volumes were up 16 percent due to Eid holidays in August 2019.

Among companies, PSO outperformed industry and peers by increasing its volumetric sales by 11 percent during 1QFY20 vs. fall of 13 percent YoY in industry sales.

The company has increased its market share from 37 percent in 1QFY19 to 47 percent in 1QFY20 (flat QoQ).

Hascol underperformed industry by posting decline of 68 percent YoY in oil sales during 1QFY20. Resultantly, market share of the company fell to 5% in outgoing quarter vs. 12 percent in 1QFY19.

In Key risks to the sector include 1) further slowdown in the economy, 2) increase in turnover tax, and 3) currency depreciation.

Key risks to the sector include 1) further slowdown in the economy, 2) increase in turnover tax, and 3) currency depreciation.

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