Sui Northern Gas Pipelines Limited (SNGP) announced its 2QFY19 and 3QFY19 financial result on Wednesday, posted a profit after tax (PAT) of PKR 3,118mn (EPS: PKR 4.92) and PKR 2,106mn (EPS: PKR 3.32) compared to PKR 2,121mn (EPS: PKR 3.34) in 3QFY18. This took the 9MFY19 bottom-line to PKR 7,819mn (EPS: PKR 12.33), depicting a jump of 31% YoY.
Gas sales of the company improved by 20% YoY in 3QFY19 given volumetric growth (RLNG imports went up by 15% YoY) as well as augmented natural gas prices (hike in Oct’18). In 9MFY19, gas sales rose by 66% YoY owed to growing RLNG sales in the network (+30% YoY) together with higher average RLNG and natural gas prices.
Finance costs of the company escalated to PKR 17,422mn in 9MFY19, up by 172% YoY led by continuous 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 54bn from PKR PKR 44bn in SPLY amid improvement in capex and hence, revenue requirement of the company. As a result, SNGP relied on increased borrowing to meet working capital requirements.
Whereas in 3QFY19, although the quantum of differential margin relaxed to PKR 22bn (PKR 18bn in 3QFY18) attributable to increase in consumer gas prices, finance costs took off by 203% to PKR 7,053mn owed to hike in interest rate by the SBP. Operating profit of the company witnessed a massive growth of 92% in 9MFY19 led by higher asset base post PKR 47bn addition to assets in the prior year, as well as added expenditure undertaken in the current year (majorly to spread the distribution network as OGRA had allowed the company to improve domestic offtake by 20% as per RERR FY19), tagged with improvement in UFG (we estimate UFG at 10.3% in 9MFY19 vs. 10.8% in SPLY).