The Alexandria Mineral Oils Company (AMOC) has reported weak results for the third quarter (3Q) of fiscal year (FY) 2019/20 on the back of low petroleum prices.
The company’s bottom-line for 3Q 2019/20 registered a loss of EGP 261m, compared to profits of EGP 77m in 2Q 2019/20 and EGP 51m in 3Q 2018/19. The gross margin declined dramatically to -8.0%, versus 5.7% in 2Q 2019/20 and 4.2% in 3Q 2018/19.
AMOC’s disappointing performance during 3Q came on the back of substantial decline in oil and petroleum product prices. These had been impacted by a substantial drop in demand due to the coronavirus (COVID-19) pandemic.
Average price per tonne dropped 24% quarter-on-quarter (q-o-q) and year-on-year (y-o-y), although volumes improved 36% q-o-q and were down 6% y-o-y.
Moreover, the refinery margin was also impacted by the quality of fuel oil feedstock received from the Egyptian General Petroleum Corporation (EGPC) which had higher sulphur content. This, in turn, left AMOC with the burden of refining the same product to reduce the sulphur content.
Naeem Research expects, in the short term, that going forward AMOC’s financial performance will remain weak due to the continued weakness in global oil and petroleum product prices. Naeem Research also continues to recommend their long term view on the stock as a BUY with a target price of EGP4.43/share.