Ayesha Mudassar

The National Refinery Limited’s (NRL) net loss and loss-before-tax (LBT) witnessed a rise of 29% and 25%, respectively, during the nine months of the ongoing fiscal year (9MFY24) compared to the corresponding period of the previous fiscal, reports WealthPK. The company recorded a net loss of Rs7.5 billion, resulting in a loss per share of Rs94.07 compared to a net loss of Rs6.02 billion, resulting in a loss per share of Rs75.33 in 9MFY23. The escalating operating costs, particularly driven by the higher utility tariffs and increased finance costs, caused losses during the review period.

Furthermore, financial constraints and lower product upliftment prevented the company from increasing its throughput, which remained low at the level of 53% against 57% in the same period last year.

Sectoral Analysis-9MFY24

During 9MFY24, the country's refinery sector recorded a notable 108% year-on-year (YoY) surge in net profit which clocked in at Rs18.1 billion against a profit of Rs8.7 billion in 9MFY23.

The profitability growth was largely led by Cnergyico PK Limited (CNERGY) which rebounded during the period with a net loss of Rs417.2 million compared to a loss of Rs10.4 billion during 9MFY23. Meanwhile, Attock Refinery Limited (ATRL), the sector's largest player, operated at a lower capacity mainly due to implementing an integrated refinery turnaround during February and March 2024. Accordingly, the net profit fell 8% YoY in the nine months. Similarly, the escalating operating costs, particularly driven by higher utility tariffs and increased finance costs, forced the NRL’s earnings to remain negative in 9MFY24, with a loss that grew by 25% compared to 9MFY23.

Pakistan Refinery Limited (PRL) has seen significant growth in its bottom line with its earnings more than double for the nine months of FY24. As per the results compiled by WealthPK of the income statements of the four refinery companies, the sector saw a slight increase of 6% YoY in sales, worth Rs908.8 billion compared to Rs857.3 billion in 9MFY23. On the expense side, the sector observed a decreased selling and distribution expenses by 38% YoY, while the other expenses rose by 93% YoY to clock in at Rs8.6 billion and Rs4.4 billion, respectively, during the review period. In addition, the industry’s finance cost dipped by 33% YoY and stood at Rs16.03 billion compared to Rs23.9 billion in 9MFY23. On the tax front, the sector paid a significantly larger tax of Rs18.7 billion against Rs14.7 billion paid in the corresponding period of the last year, depicting a rise of 108% YoY.

Company profile

National Refinery Limited was incorporated in Pakistan on August 19, 1963, as a public limited company. The company is engaged in the manufacturing, production, and sale of a wide range of petroleum products.

Future Outlook

The country’s economy and overall business climate are anticipated to remain challenging, characterized by the escalating costs of operations, high inflation, and unstable refining margins. However, these challenges can be overcome effectively through the implementation of appropriate policies and effective risk management.

Credit: INP-WealthPk