Meghna Petroleum suffers cash crunch in Q1 on higher payments to suppliers

The state-run Meghna Petroleum suffered a net operating cash crisis in the first quarter (Q1) of this fiscal year due to increased payments to suppliers, employees and others.
The country's second largest petroleum marketer saw cash inflows of Tk 79.60 billion but made payments totalling Tk 87.06 billion, resulting in a negative operating cash flow of Tk 7.46 billion in the July-September quarter.
Consequently, the net operating cash flow per share (NOCFPS) plummeted to a negative Tk 68.91, in stark contrast to the positive Tk 115.51 reported in the same quarter the previous year, according to the company's filing with the stock exchange on Wednesday.
Meghna Petroleum, which is engaged in the procurement, storage, and marketing of petroleum products on behalf of the government, also witnessed a 3.2 per cent year-on-year decline in net profit for the September quarter due mainly to lower sales. It reported a Tk 911 million net profit, down from Tk 941 million in the same quarter a year before.
The company's net earnings from petroleum product sales dropped by 4.30 per cent year-on-year to Tk 630.62 million in July-September quarter.
Following the announcement of the company's earnings, its stock price experienced a 0.78 per cent decline, closing at Tk 204 on Wednesday.
A company official, who declined to be named, attributed the profit fall to lower earnings from petroleum product sales and higher operating expenses.
Operating expense surged by 54 per cent year-on-year to Tk 409 million, driven by increased administrative, marketing and finance costs.
However, the official remains optimistic about a turnaround, citing the potential for higher non-operating income amid rising interest rates on bank deposits.
Although the state-run oil and petroleum marketing entity saw a decline in profit in the Q1 of FY'24, it had maintained a staggering annual profit growth in FY'23, fuelled by non-operating income amid rising interest rates.
In FY'23, its annual profit soared 40 per cent year-on-year to Tk 4.42 billion, riding on increased income from bank deposits.
The company's non-operating income witnessed a significant growth due to higher interest rates on bank deposits, contributing to the impressive annual profit.
Based on this robust performance, Meghna Petroleum declared a 160 per cent cash dividend for FY'23, the highest in at least 10 years.
Its financial statements show that the company has consistently derived higher income from non-operating sources than from its core operations.
Listed in 2007, Meghna Petroleum procures, stores, and markets petroleum products, including lubricants, bitumen, liquefied petroleum gas, and battery water.

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