Though Pakistan Refinery Limited (KSE: PRL) is heading in the right direction with the commencement of its isomerization plant, the refinery’s profitability has been in a pickle in recent times. In FY15 the oil sector continued to face difficulties due to sharp decrease in international oil prices. The sharp decline in crude and product prices resulted in significant inventory losses to PRL as well, and the firm ran into a loss after tax. However, the refinery was able to take a step ahead of its peers when it completed and commissioned the first isomerization plant in July 2015.
With that development at its hand, the refinery announced a sizeable improvement in its financial position in 1QFY16. PRL’s negative earnings saw a decline in 1QFY16; net loss after tax in 1QFY16 stood at Rs648 million, which is 65 percent, lower than what it was in the similar period of FY15.
The firm’s revenues slipped by 42 percent year-on-year as softer oil prices continued to plague sales. However, due to decline in net sales, the firm witnessed a decline in the gross loss and gross margins.
While PRL’s bottom line remained in the red zone in 1QFY16 with EPS of Rs(2.28) versus Rs(6.68) in 1QFY15, there may be a silver lining for the refinery in FY16. The right-issue in FY15, a decrease in year-on-year losses for the first quarter of FY16 and the firm’s growth projects are the key in reducing the firm’s reliance on bank borrowing, finance cost and smoother output. The isomerization plant will add to its production of petrol – a POL product vastly being consumed in the country. Also the management emphasizes the importance of its Hydro De-sulphurisation Unit that will produce Euro-II complaint diesel.
Comments
Comments are closed.