Pakistan Refinery Limited (PSX: PRL) recuperated in FY16 where it turned to profits after weak FY15 and FY14. Its recent 1HFY17 financial performance points out that the uptrend in profitability will continue in FY17 as well.
For the first half of FY17, the revenues continue to decline primarily on account of lower oil prices; however, PRLs earnings are up by more than three times in the period. This significant jump in earnings has come from the first quarter as earnings for 2QFY17 posted a decline of around 34 percent, year-on-year. The rise in its first quarter profits came from higher gross refinery margins as well as rupee dollar parity. The growth in gross margins was missing in 2QFY17. Earnings in 1HFY17 and 2QFY17 were also supported by significantly higher other income.
PRLs financial result for 1HFY17 was also accompanied by an extract from the notes regarding the companys ability to continue as a going concern. A per the financial statements, PRL had accumulated losses of RS4.15 billion resulting in net negative equity of 0.72 as on December 31, 2016, with its current liabilities exceeding current assets by Rs7.6 billion. However, it is also highlighted in the extract from notes to the financial statement its profits along with banking facilities will ease the pressure on companys liquidity.
PRL is out of the negative earnings zone, and its isomerization plant has been commissioned. Its 1QFY17 Directors Report highlights that PRL is working on the Diesel Hydrodesulphurisation Unit (DHDS) and Upgrade Project, which requires the company to meet the EURO II specification diesel by June 30, 2017. For this, the firm has engaged an international consultant for evaluating different technological variants for upgradation of the refinery including installation of the Diesel Hydro Desulphurisation Unit (DHDS). However, it seems like the plant will not be up and running by 2017 June as the report points out that company is fully engaged with the relevant government authorities to extend the deadline of setting up DHDS units.
Comments
Comments are closed.