During 1QFY23, sales grew to PKR73 billion. Moreover, gross
profit increased to PKR1.6 billion as cracking margins are on a decline
globally. This led to an increase in net profit to PKR1.00 billion and EPS of PKR
1.63.
PRL is a subsidiary of PSO with 63.6% holding. Plant’s
annual capacity is 50,000bpd which is run on hydro skimming technology with
Crude distillation, Hydrotreating, Platformer and Isomerisation units.
PRL product mix and margins: mainly comprises of HSD
and MS, constitute 70% of the refined products and have higher margins than the
rest. However, negative margins in FO has made it unviable for exports.
Wood plc was awarded to conduct a FEED study for the upgrade
of the plant. Further, JS Global and UBL are hired as financial advisors for
the arrangement of financing for the project. This deep conversion refinery
upgrade project will allow the Company to produce Euro-V compliant fuel at the
same time enhancing capacity to 100,000 bpd.
The Company has altered its sources to lighter crudes which
has resulted in higher profitability. It was mainly due to less reliance on
ADNOC due to its lower grade and increasing the share of ARAMCO and KPC. In
turn FO proportion in the production mix has declined to 22% which was more
than 30% in FY19.
Higher of ACT (based in higher of accounting income and
taxable income), normal corporate tax or the minimum turnover tax (0.5% on
local and 1% on exports) is applicable on the Company.
During 1QFY23, taxation was provided on turnover tax which
included PKR100 million deferred tax.
After the Sindh High Court decision on super tax, the
Company is hopeful that its reversal would augment profitability going forward.
Future outlook
Despite delays in the issuance of the new refinery policy,
the Company remains committed to upgrade project as the country is reducing its
reliance on FO for power generation and better margins are offered by HSD and
MS.
The Company also changed its logo to reflect its
contribution for the sustainable development of the country.
Key challenges include subdued refinery margin which is
currently declining from its peak. Also, high interest rate and PKR depreciation
will continue to dampen profitability. Lastly, low FO upliftment may hamper
cash flows in the coming months.
