Sui Northern Gas Pipelines Limited (SNGP) announced its FY20 and 1QFY21 financial result today, posting a profit after tax (PAT) of PKR 5,998mn (EPS: PKR 9.46) and PKR 3,181mn (EPS: PKR 5.01), respectively. Earnings in the last quarter arrived at PKR 219mn (EPS: PKR 0.35) against a loss of PKR 744mn (LPS: PKR 1.17) in SPLY. Alongside the result, the company announced a final cash dividend of PKR 4.00/share (FY19: 3.50/share).
· Gas sales of the company went down by 10% YoY in FY20 given volumetric decline in RLNG imports (-8% YoY) as well as the impact of depleting gas reserves (lower domestic gas offtake) and lower International Brent Oil price (average of USD 52/bbl vis-à-vis USD 69/bbl in FY19). In 1QFY21, sales underwent a massive decline of 34% YoY led by a 3% decrease in RLNG offtake coupled with a massive 30% dip in International Brent Oil price to USD 43/bbl vs. USD 62/bbl in SPLY in lieu of a drastic erosion in aggregate demand post outbreak of COVID-19.
· Meanwhile augmenting capital expenditure (PKR 21.8bn estimated for FY20) tagged with lower UFG (OGRA estimates UFG for the year at 11.21% under FY20 RERR vs. 10.86% in SPLY) aided the operating profitability to PKR 57.4bn in FY20, depicting a robust jump of 55% YoY.
· Finance costs of the company escalated to PKR 49.0bn in FY20, up by 90% YoY led by rise in differential margin (receivable from the Government under the provisions of license for transmission and distribution of natural gas granted to the Company by OGRA) to PKR 126bn (9MFY20: PKR 60.1bn / FY19: PKR 69.9bn). As a result, SNGP relied on increased borrowing to meet working capital requirements. Moreover, growing quantum of late payment surcharge also augmented financial charges. In 1QFY21, finance costs have depicted a cut of 19% YoY / 32% QoQ to PKR 8.9bn primarily owed to a sharp 625bps cut in the benchmark policy rate at the beginning of the year by the SBP to support businesses post initial outbreak of coronavirus.
· The company booked effective taxation at 29% during FY20 (FY19: 37%).
Courtesy – AHL Research