September 11, 2019 (MLN): Pakistan Refinery Limited has announced its financial earnings for the year ended June 30, 2019, wherein the company has incurred losses of Rs. 5.8 billion (LPS: Rs. 18.92), as opposed to profits of Rs. 503 million (EPS: Rs. 1.64) earned in the last year.
As per the justifications provided by the company in its financial report, the negative margins were a result of an unprecedented trend of price of motor gasoline (petrol) that traded in the international market below the crude oil prices.
In addition, the decline in demand of furnace oil in the country led to inventory build-up and pressurized refinery operations. Therefore, in order to ensure continuous operations and to attract customers the prices of furnace oil were reduced which had a negative impact on company’s profitability.
Also, the company failed to meet the deadline of setting up Diesel Hydro-desulphurization Unit (DHDS) unit and hence was subjected to downward adjustments of its HSD pricing, causing losses of Rs. 1.15 billion, which are a part of the losses incurred during the year.
The report further stated that the above conditions may cast a significant doubt on the company’s ability to continue as a going concern and the company may be unable to realize it assets and discharge its liabilities in the normal course of business.
The company believes that since extraordinary low petrol pricing has started rising above crude oil pricing, consequently refining margins will improve. Further, furnace oil imports will be reduced as per the policy of the government to accommodate local production of furnace oil.
Expected macroeconomic stability due to government’s efforts to build foreign currency reserves will stabilize PKR-USD parity thus abnormal exchange losses are not expected. Moreover, with the support of its parent company to uplift refined products and the availability of funded and unfunded credit facilities, the company will be able to support its liquidity management.
During the year, the Board of Directors also approved the Refinery Upgrade Project, the final investment decision will be taken by the Board after satisfactory conclusion of the FEED and project’s financial close.
|
Consolidated Financial Results for the year ended June 30, 2019 ('000 Rupees) |
|||
|---|---|---|---|
|
Jun-19 |
Jun-18 |
% Change |
|
|
Revenue from contracts with customers |
115,740,971 |
92,229,260 |
25.49% |
|
Cost of sales |
(118,915,466) |
(91,184,232) |
30.41% |
|
Gross profit |
(3,174,495) |
1,045,028 |
|
|
Distribution costs |
(250,171) |
(201,163) |
|
|
Administrative expenses |
(485,457) |
(388,701) |
-35.64% |
|
Loss allowance on trade receivables |
(121,939) |
||
|
Other operating expenses |
(23,763) |
(124,355) |
-1.94% |
|
Other income |
267,304 |
1,090,813 |
-102.18% |
|
Finance cost |
(1,442,624) |
(591,228) |
|
|
Share of net loss of associate accounted for using the equity method |
(13,963) |
(1,598) |
|
|
(Loss)/Profit before taxation |
(5,245,108) |
828,796 |
|
|
Income tax expense |
(576,015) |
(325,007) |
77.23% |
|
(Loss)/ Profit after taxation |
(5,821,123) |
503,789 |
|
|
(Loss)/ earnings per share – basic and diluted (Rupees) |
(18.92) |
1.64 |
|
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