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Vukod reported a decrease in revenue and net income for the first quarter of 2025, driven by a decline in fuel sales volumes and margins. The company, a leading player in Qatar’s petroleum distribution market, noted a 7% year-over-year drop in total revenue to QR 6.3 billion. Net income also fell by 5% to QR 230 million. According to InvestingPro data, the company currently trades at a P/E ratio of 14.2x and is considered undervalued based on its Fair Value analysis. Despite these declines, Vukod maintains a strong market presence with an 85% share in Qatar’s petroleum retail market.
Key Takeaways
- Vukod’s total revenue declined by 7% year-over-year to QR 6.3 billion.
- Net income decreased by 5%, driven by lower fuel sales volumes and margins.
- The company holds an 85% market share in Qatar’s petroleum retail sector.
- Diesel sales fell 7% year-to-date, while gasoline sales remained stable.
- Jet fuel prices decreased 12% year-to-date, impacting revenue.
Company Performance
Vukod’s performance in Q1 2025 was marked by a significant decrease in revenue and net income compared to the same period last year. The company attributes this decline to reduced fuel sales volumes and lower margins in its fuel segment. Despite these challenges, Vukod continues to dominate the Qatari petroleum retail market with an extensive network of 125 petrol stations.
Financial Highlights
- Revenue: QR 6.3 billion, down 7% year-over-year
- Net Income: QR 230 million, down 5% from Q1 2024
- Revenue from fuel sales: 97% of total revenue
- Diesel sales: down 7% year-to-date
- Non-fuel retail sales: decreased by 12%
Executive Commentary
Pradeep Kumar, Vukod’s CFO, emphasized the company’s strong fundamentals despite the current challenges. "Vukod’s fundamentals continue to remain robust," he stated, highlighting the company’s resilience in a volatile market. Sultan Yaseem Almadeed, Finance Manager, reiterated the company’s core focus on fuel distribution and sales in Qatar.
Risks and Challenges
- Market Volatility: The company faces ongoing market demand volatility, which could impact future sales and profitability.
- Fuel Price Fluctuations: Decreasing jet fuel prices and potential price volatility in other fuel segments pose risks to margins.
- Economic Factors: Broader economic conditions and completed infrastructure projects have reduced fuel demand, affecting sales volumes.
Vukod remains optimistic about future recovery, anticipating that fuel volumes will bottom out soon. The company continues to monitor market conditions closely, aiming to navigate the challenges posed by economic factors and fuel price fluctuations. With a beta of 0.23, InvestingPro data shows the stock historically demonstrates low price volatility. The company maintains a strong balance sheet with more cash than debt, suggesting resilience against market uncertainties. For detailed analysis and comprehensive valuation metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
Full transcript - Qatar Fuel (QFLS) Q1 2025:
Angela, Conference Moderator: Hello, and welcome to Vukod Conference Call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q and A session. Now I would like to hand the call over to Sidon. You may begin.
Vivian, QMB Financial Services Representative, QMB Financial Services: Thank you, Angela. Good morning to you all, and thank you all for joining us this morning for Vocud’s first quarter of twenty twenty five earnings conference call. My name is Vivian. I’m with QMB Financial Services. On today’s call, we have three members of Fuku’s management team.
They are first going to present the 1Q results and then answer investors’ questions afterwards. On the call, have the CFO, Pradeep Kumar. We also have Sultan Yaseem Almadeed, the Finance Manager and we have got Akhmad Sahid Almansouri, the IR Officer. I will now turn over the call to Akhmad to begin the call. Please go ahead, sir.
Akhmad Sahid Almansouri, IR Officer, Vukod: Thank you, Fabienne. Good day to all the participants, and we hope everyone is keeping safe and healthy. We welcome you all to Okud’s first quarter end March twenty twenty five results conference call and appreciate your participation as Ruhod is committed to continuously enhance its Investor Relations initiatives. This is to strengthen our communication and improve transparency with all members of the global investment community. The presentation of this call will be available on the Investor Relations section of our website.
Any statement that refers to expectations, projections, guidance or any other characterizations of future events, including financial projections or future market conditions, is a forward looking statement based on the assumptions to date. Actual results may differ materially from those expressed in these forward looking statements. The company cannot disclose any commercially sensitive information due to the confidentiality agreement signed with suppliers. Please refer to Slide number two for the full version of the claims statements. All figures expressed in this call are on Qatar reals, and the conversion for the same U.
S. Dollar is Qatar reals 3 point 6 4 2 dollars Now I would like to hand over the call to our Finance Manager, Mr. Sultan Jasmin Nawdid, to provide a brief overview of Wahud and update on the key operation activities. Thank you, Ahmed. The key vision of Wahud is to
Sultan Yaseem Almadeed, Finance Manager, Vukod: be the leading petroleum product distribution and related service marketing company in the region. I am on Slide four now, which shows the overview of Wahud Group. Wahud started operation in 02/2002 with exclusive rights for storage and distribution of petroleum products in the state of Qatar. Our operations started with two petrol stations in 02/2003, and we have grown to 125 stations by March. The chart on the right shows Wahud station network.
Wahud also owns and operates 13 Fahad centers for inspection of vehicles across the state of Qatar. I am on Slide five now, which shows the key operation of Wahud Group. Key operation of Wahud Group are diesel and gasoline fuel distribution and sales jet fuel distribution and sales shore to ship and ship to ship bunkering LPG distribution and sales natural gas distribution and sales fuel bunkering, bitumen operation, C store and auto care activities vehicle inspection services and finally, office leasing. Turning to Slide seven now, which shows the diesel and gasoline fuel sales volume trend analysis. As mentioned before, the core activity of Bahud is fuel distribution and sales in the state of Qatar.
Total fuel sales lower by 3% during YTD March as compared to the same period of last year, driven by market demand. Diesel sales also have seen a decrease by 7% YTD March as compared to the same period of last year, driven by market economic factors. Combined gasoline sales volume for first quarter ’20 ’5 percent remained almost the same as that of first quarter ’20 ’4 percent. On quarter on quarter basis, sales volume for first quarter twenty twenty five decreased by 126% for diesel and gasoline, respectively. Average fuel prices for diesel and gasoline remain on the same during the reporting period.
Turning to Slide eight, which shows the jet fuel sales volume comparison. Jet fuel sales were lower by 3% for the first quarter of 25% as compared to the same period of last year, driven by market demand. On quarter on quarter basis, jet fuel sales volume for first quarter twenty five decreased by 9%, driven by market demand. Jet fuel prices for YTD March of twenty five decreased by 12% as compared to the same period of last year, driven by change in crude oil prices. Combined volume combined sales volume for ultra strong product decreased by 3% during YTD March 25 as compared to the same period of last year.
Turning to Slide nine, which shows the quarter’s trend of retail volume sales. Overview of retail volume sales at Wakut Metro Station remained almost same for first quarter of 25% as compared to the same period of last year. On quarter on quarter basis, retail fuel volume in first quarter of ’20 ’5 percent decreased by 96% for diesel and gasoline, respectively. The market share of alcohol in the petroleum retail market in the state of Qatar reached to about 85% during YTD March 25. Nonfuel retail sales decreased by 12% during YTD March 25, mainly on account of a decrease in ABC.
Now I would like to hand over the call to our CFO, Mr. Pradeep Kumar, to discuss the key financial results.
Pradeep Kumar, CFO, Vukod: Thanks, Ulsan for all the volume updates. Good day, everyone. I would like to discuss the consolidated financial results of WUKUS for the first quarter twenty twenty five. Slide 11 shows the revenue trend of Wukuth. Revenue from fuel sales account for nearly 97% of the total revenue.
Wukuth achieved total revenue of R6.3 billion dollars during first quarter of twenty twenty five as compared to R6.8 billion dollars during the same period last year, showing a decrease of 7%. This is mainly driven by overall decrease in fuel sales volume by 3% and decrease in average sales by around 6% during the first quarter of twenty twenty five. On a quarter on quarter comparison basis, the total revenue decreased by 6% during first quarter twenty twenty five, mainly driven by decrease in sales volume by 9% each, which is partly offset by increase in average sales price by 3% each. Turning to slide 12, which shows the net income trend analysis. Fukush has made a net income of Qatar Riyadh 2 30 Million for the first quarter twenty five as compared to Qatar Riyadh 2 40 3 Million during the same period in 2024, representing a decrease of five percentage.
The detailed analysis of net income variance is given in the next slide. Slide 13 shows the key variance analysis of net income for the first quarter of twenty five as compared to same period last year. The decrease in net income of R313 million dollars is due to following major factors. Fuel segment margin decreased mainly driven by overall decrease in fuel sales volume. Trading stock price variance is mainly driven by impact of price movements on jet fuel inventory.
B2B segment margin increased mainly due to income during first quarter ’twenty five as compared to same period last year. Others lower mainly due to lower dividends due to prevailing market conditions and timing of return on cash and investments. Vukoot’s fundamentals continue to remain robust and Vukoot is committed to meet all its strategic goals while placing safety as a top priority. Vukoot has a strong leadership committed towards delivering results to the shareholders. With this, we are ready for the Q and A session.
Thank you.
Angela, Conference Moderator: Thank you. We will now begin the question and answer session. You. And your first question comes from the line of Rob Kepper from
Rob Kepper, Analyst: Yes. Hi, everyone. Thanks for your time today. Much appreciated, as always. Yes, could you just start just by looking on the volume side on the kind of diesel and gasoline kind of core business.
So yes, guess, in particular, like those volume numbers kind of quite a bit weaker again, in particular, diesel volumes down 12%. Could you just talk a little bit about end markets there? Like what’s driving it so much lower specifically? That’d be great.
Pradeep Kumar, CFO, Vukod: Well, this gasoline and diesel demands are purely driven by the market demand. And specifically in terms of diesel, as you know very well, some of the major infrastructure project is completed here. So definitely, that will impact our diesel sales volume. So these are the major factors.
Sultan Yaseem Almadeed, Finance Manager, Vukod: But I guess, mean, a lot
Rob Kepper, Analyst: of those infrastructure projects were also completed by first quarter last year as well. So I guess I’m kind of intrigued for such another big step down. Do you have like visibility? Is there anything you’re tracking on when kind of those volumes can bottom out to your mind?
Pradeep Kumar, CFO, Vukod: At this point, we think that it’s bottoming out. So, are it’s going to recover in coming quarters and coming years.
Rob Kepper, Analyst: Okay. Got it. And then, yes, I just wanted to, yes, just talk a little bit about profitability. So yes, I guess the first quarter in hindsight was a relatively steady quarter considering what we’ve seen obviously in markets in the last few weeks in April and particularly like the moves we’ve seen in oil and energy markets. Yes, I guess just so we’re kind of all clear.
So as kind of things stand with obviously the negative price moves in the second quarter, would we likely see a bit of a negative margin hit like in the second quarter from that? Or does it take longer to feed through into the profitability?
Pradeep Kumar, CFO, Vukod: Yes, we are closely monitoring the market. You are right. We see some volatility in the prices and we will know the outcome towards the end of this quarter. But definitely that lower prices will impact it, especially the inventory that we are carrying will have an impact with the change in prices. Thank you.
Rob Kepper, Analyst: Yes. Okay, great. And then I just wanted to ask on the balance sheet. Yes, obviously, you’ve got a lot of liquid assets on the balance sheet, and it’s very large in proportion of your market cap. Could we just get an update on, like, the asset allocation of your marketable securities today?
Yes.
Pradeep Kumar, CFO, Vukod: On the investments, approximately 20% is in the equity market and remaining lying in our cash in long term with the bank. So that may be protective volatility in the market to a larger degree.
Rob Kepper, Analyst: Got it. Okay. And do you tend to take any action in times like this where there’s volatility or just buy and hold?
Pradeep Kumar, CFO, Vukod: Well, we started the process last year. We did last year itself, we continue to watch the market.
Rob Kepper, Analyst: Your
Angela, Conference Moderator: next question comes from the line of Wei Chao from Alrayan.
Zohy Parvesh, Analyst, Alrayan Investment: This is Zohy Parvesh from Alrayan Investment. So on Page 13, you mentioned that the trading stock price variance has had a positive impact on the trading stock price, this inventory gain. But the fuel jet fuel prices were lower, the jet fuel volumes were lower. So how come there is a positive impact on the fuel inventories? Could you give us some color on that?
The second question is on the margins. Usually, your gross margins are linked to the volume and the volume in this quarter is lower. So then what led to the gain in the gross margins? These are my two questions for now. Thank you.
Pradeep Kumar, CFO, Vukod: Yes. First, I’ll answer with your last part of the question, the margin. If you look my Slide 13, which clearly states that the operating margin has come down due to lower sales volume. On the first part of your question, which is about the trading stock price variance, as I mentioned during the variance analysis that the price fuel prices compared to last quarter of twenty four, it increased by three percentage in the first quarter. So, of course, the fuel price variance you are comparing to the inventory that we have on thirty first December versus the moment in this quarter.
So, that way the price has gone up. Naturally, when the price goes up, we will get the benefit of that. And if the price goes down, we will take the hit. So first quarter, the price has gone up by three percentage.
Zohy Parvesh, Analyst, Alrayan Investment: So the first quarter, the jet fuel price is higher by 3% quarter over quarter?
Rob Kepper, Analyst: Yes.
Zohy Parvesh, Analyst, Alrayan Investment: Okay. But this shows a variance, the I mean, the analysis on Page 13 is between the first quarter of ’twenty four and the first quarter of ’twenty five. So I thought that between 2425%, the prices are lower by 12%. So is this is my understanding correct that this is the quarterly analysis or the annual
Pradeep Kumar, CFO, Vukod: Okay. Let me give you that variance a bit. This is the variance between two quarters. And if you look at the first quarter variance of 2014, it’s the price existed on thirty one December ’twenty three versus the price during the quarter of ’twenty four. Now, again, this year, we are taking the price out of thirty one December twenty four versus the moment in the first quarter of twenty five.
That’s what I was mentioning. So, it is that way, you’re right also, it’s a variance between two quarters, but the price prevailed on the thirty one December. That’s how an impact on the inventory price movements.
Zohy Parvesh, Analyst, Alrayan Investment: Okay. Thank you. My last question is on the dividend income. The dividend income has I think come down this quarter. Is it because of the interim dividends, which last year, you probably earned the full year dividend and this year, you earned only second half dividends.
Is it only because of that or it’s because the total yield has actually come down for your portfolio?
Pradeep Kumar, CFO, Vukod: Well, there are two factors. And one of the reasons you already explained is the interim dividend. During second and third quarter of last year, we received some interim dividends, which comes out of the final dividend which we received this year. But on the other side, definitely we are going to receive some interim dividends towards second and third quarter of this year as well. So that makes a timing adjustment too.
On the other side, we reposition some of the equity investment toward the market risk, of course, which goes into kind of cash where the return is going to come over a period of time. So it’s timing adjustment as well.
Rob Kepper, Analyst: Sounds good.
Angela, Conference Moderator: There are no further questions. I will now turn the call back over to Simeon for any closing remarks.
Vivian, QMB Financial Services Representative, QMB Financial Services: Thank you, Angela. It looks like we don’t have further questions, which brings us to the end of our call today. Thank you for joining us. Thanks to the management team for taking time to update the market. And please join us for the Q2 conference call.
Enjoy the rest of your day.
Angela, Conference Moderator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining.
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