Karachi October 30 2022: National Refinery Limited reported loss during the first quarter due to cancellation of cargoes and exorbitantly higher LC confirmation rates on crude oil imports, according to the information shared by the company.
“The current quarter started with good product margins, however, since the beginning the foremost challenge your Company faced has been securing confirmation from foreign banks on Letters of Credit (LCs) for import of Crude Oil due to downgrading of Country’s outlook to negative by international rating agencies, which not only resulted in disruptions in Crude Oil import plan but also caused cancellation as well as delayed supplies of crude oil cargoes at exorbitantly higher LC confirmation rates” says Company’s Chief Executive Officer Jamil A. Khan.
He added, “These difficulties further aggravated by unprecedented country-wide flooding that caused widespread devastation especially in agricultural and transportation sector resulting in decline in product offtake during the quarter. Resultant ullage constraints together with unscheduled maintenance of fuel refinery’s hydrogen production unit not only forced the refinery to operate at below 50% throughput but also disrupted HSD production in the month of August 2022.”
The situation further worsened due to sharp devaluation of Pak Rupee against US Dollar which touched historical low resulting in net exchange loss of Rs. 4,057 million for the quarter as compared to net exchange loss of Rs. 1,071 million during the corresponding period. In the meantime crude oil prices in international markets declined, squeezing the product margins; consequently, the Company sustained inventory losses with period-end inventory write down valuing Rs. 788 million. Under these difficult circumstances, Fuel segment of the company incurred loss after tax of Rs. 4,457 million as compared to loss after tax of Rs. 1,567 million in the same period last year.
Lube Segment earned profit after tax of Rs. 66 million as compared to profit after tax of Rs. 1,973 million during the corresponding quarterlast year.Decline in sales volume of Lube BaseOils have been witnessed mainly because of flood situation throughout the country coupled with other operational constraints. Your Company exported 25,220 M.T of Bitumen during the quarter as compared to 6,402 M.T in the corresponding period. Throughput attained for the quarter is higher by 2.6% to 87% as against the same period last year
In view of the foregoing, your company incurred loss after tax of Rs. 4,391 million resulting in loss per share of Rs. 54.92 as compared to profit after tax of Rs. 406 million that had resulted in earning per share of Rs. 5.08 in the corresponding period.
Company’s working capital financing requirement has increased considerably during the quarter due to slow upliftment of products and higher crude oil prices as compared to corresponding period. Also, there has been substantial increase in the mark-up rates due to higher policy rate in the current period as compared to same period last year. Resultantly, the Company incurred mark-up expense of Rs. 1,280 million during the quarter as compared to Rs. 448 million in the corresponding quarter.
