The management of Hi-Tech Lubricants Limited (HTL) held a corporate briefing session Nov 24 to discuss the FY21 financial results and future outlook on the company’s strategy going forward.
· Hi-Tech Lubricants Limited (HTL) declared a profit after tax (PAT) of PKR 143mn (EPS: PKR 1.24) in 4QFY21 compared to profit of PKR 214mn (EPS: PKR 1.85) in 4QFY20. This took the FY21 profit to PKR 651mn (EPS: PKR 5.62) compared to profit of PKR 122mn (EPS: PKR 1.05) during SPLY.
· Topline of the company settled at PKR 3,344mn (highest ever quarterly sales) in 4QFY21, up by 74% YoY. The jump in sales is due to massive growth in overall sales volumes. During FY21, topline witnessed a massive growth of 88% YoY to PKR 10,597mn due to growing demand for lubricants amid surge in automobile sales and rampant economic activity, as well as improvement in prices.
· The company posted a gross profit of PKR 579mn with gross margins set at 17.3% in 4QFY21 compared to gross profit of PKR 452mn (23.6%) in SPLY. The decline in gross margins is attributable to higher discounts offered in the quarter to attract new customers, lagged price increase and rising market share in the highly competitive mid-tier and low-tier market segment.
· The company follows cost plus model and they have now easily passed on the impact of high raw material cost which will keep margins sustainable, going forward.
· The company is continuously focusing to improve geographical presence in all provinces (Central, North and South) with strong channel of over 169 distribution network nationwide compared to 150 previously.
· Expansion for Sahiwal storage is completed which will allow company to add another 26 retail fuel stations in Punjab.
· Construction of Nowshera Oil storage facility is complete and final marketing license is awaited. Management believes marketing license is expected in the next few months while 15 new retail outlets in KPK are expected to commence operation before Jun’22.
· Company plans to establish 126 retail outlets in the next five years with major focus on Punjab and KPK.
· Company is also expanding its filling, bottling and lubricant storage capacity. Addition of filling line and bottling machinery will increase capacities by approximately 57% and 26% from current capacity.
· The company is entering into plastic packaging business which is expected to start its trial production from 4QFY22.
· Management expects lubricant sales to witness double digit growth given massive growth in auto sales and revival of economic activity to keep lubricant demand upbeat.
Courtesy – AHL Research