PACRA updates entity ratings of Attock Refinery Limited

May 30, 2023 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has updated the entry rating of Attock Refinery Limited (PSX: ATRL) to "AA" for long-term and "Al+" for short term with a stable outlook forecast, latest press release issued by PACRA showed.

ATRL primarily produces premium motor gasoline, jet fuels, kerosene, high-speed diesel, light diesel oil, furnace fuel oil, mineral turpentine oil, jute batching oil, solvent oil, LPG and various grades of bitumen.

The ratings assigned reflect ARL's sound risk absorption capacity emanating from its sizable equity base along with expertise and proven history of operations in the energy sector.

The depreciation of PKR against USD resulted in unpredictable exchange losses to the refineries.

Therefore, ATRL's core business remains exposed to the vicissitudes in international crude oil and product prices, which in turn, steer the gross refining margins (GRMs) of the company.

The company’s spread between prices of petroleum products and crude oil remained healthy during the period resulting in better margins which was translated into exceptional performance.

During the period ended, on March 31, 2023, the company supplied 1,369 thousand Metric Tons of various petroleum products while operating at about 80% of the capacity (9MFY22: 1,348 thousand Metric Tons, 78% capacity).

With respect to profitability, ATRL earned a profit after tax of Rs22,686 million (9MFY22: Rs2,839m) from refinery operations with addition of dividend income after tax of Rs1,313m (9MFY22: Rs947m) from associated companies, resulting in a total profit after taxation of Rs23,998m (9MFY22: Rs3,787m).

The press release further added that the company with its strong cash flow position, repaid its borrowings with no reliance on debt.

Notably, the government has approved the Pakistan Oil Refining policy for New/Greenfield refineries while negotiations on policy for Current/Brownfield refineries is ongoing.

The policy remains crucial for the refineries to enhance their capacities and upgrade their plants in order to meet better product compositions and standards.

The stable outlook reflects on ATRL's successful and efficient management of operations to shield its business profile from ongoing external vulnerabilities.

Going forward, along with the Attock Group’s remarkable strength and business acumen, the sustenance of current performance will further compliment the ratings.

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