EUR 4.27 For Business Accounts Only

Pakistan Oil Marketing: Dismal Performance in FY19; Ex-FO volumes down 13% YoY more than a decade low

 

• The economic slowdown and significant increase in petroleum prices due to rupee devaluation crumbled overall FY19 petroleum sales; down by 27% YoY. Excluding Furnace Oil (FO) sales, volumes declined by 13% YoY, highest attrition in more than a decade.
• Furnace oil sales continued its declining trend; down by 59% YoY owing to change in the country’s generation mix to relatively cheaper fuels (namely RLNG/Coal).
• Product wise, HSD volumes contracted by 20% YoY to 7.2mn tons due to its smuggling from Iran region and a slowdown in economic activities (mainly transport).
• MS oil sales during FY19 remained flattish (0% YoY) at 7.4mn tons vs last 10-year (FY09-18) CAGR of 18%. Muted sales in the MS segment could be attributed to the declining purchasing power of consumers amidst inflation and increase in petrol prices by ~30% in the last year.
• During Jun 2019, petroleum sales fell 29% YoY on the back of a 57% YoY decline in FO sales and 24% YoY decline in HSD sales.
• Company wise, Hascol remained top underperformer during FY19 as the company lost 3.5ppts and 2.4ppts YoY market share in MS and HSD respectively.
• Pakistan State Oil (PSO) lost 2-2.4% market share in MS/HSD. GO outperformed peers by gaining 3ppts YoY market share in each HSD and MS.
• Key risks to the sector include 1) further slowdown in the economy, 2) increase in turnover tax and 3) currency depreciation.