APL Profit Falls 28.6%: Tax Implications for Petroleum Sector

Attock Petroleum Limited (PSX: APL) disclosed a 28.6% decline in net profit for the nine months ended March 31, 2025, posting Rs7.7 billion [EPS: Rs61.88], down from Rs10.78 billion [EPS: Rs86.65] last year, a development with key tax implications for stakeholders. For our clients, this underscores the importance of tax optimization amidst shrinking profits and rising costs.

Net sales fell 12.4% to Rs346.74 billion, while gross profit dropped 24.2% to Rs13.41 billion, despite an 11.8% reduction in the cost of products sold. Operating expenses surged 17.2% to Rs6.38 billion, and finance costs spiked 26.7% to Rs1.48 billion, reflecting higher borrowing pressures. Meanwhile, finance income dipped 11.4% to Rs5.66 billion, though other income rose 25.2% to Rs1.65 billion, offering some relief.

A 30.2% lower tax provision of Rs4.7 billion—down from last year—eased the burden on the bottom line, highlighting the importance of strategic tax planning. Profit before taxation declined 29.2% to Rs12.4 billion, and APL’s share of profit from associates grew to Rs411 million, up from Rs101 million. Post-announcement, APL’s share price fell 1.7% to Rs318.30, underperforming the Pakistan Stock Exchange (PSX).

From a tax law perspective, clients in the petroleum sector must evaluate deductibility of rising finance costs and operating expenses under the Income Tax Ordinance, while leveraging tax credits for associate profits. Ensuring compliance with Federal Board of Revenue (FBR) regulations on profit reporting and tax provisions is critical to mitigate risks in this challenging financial environment.