Attock Oil Group’s refinery, Attock Refinery Limited (PSX: ATRL) in its latest announcement for its financial performance for 1HFY23 depicted a whopping increase in its earnings. The refinery announced over 6.5 times increase in its earnings for 2QFY23 year-on-year, and over 9 times increase in the profitability for 1HFY23 over 1HFY22 with some support from non-refinery operations as well.
The growth in earnings came from a robust topline on the back of higher prices year-on-year. The spread between prices of petroleum products and crude oil that started to improve in the previous year continued to improve in FY23. This helped the company absorb high cost coming from high inflation. As a result, ATRL’s gross refining margins for 2QFY23 and 1HFY23 jumped by around 900 basis points. Also, the growth in topline was high despite the decline in furnace oil demand that is faced during the winter season. ATRL shut down its plant temporarily in December for two weeks due to ullage constraints i.e. the storage constraint when furnace oil is not taken by the power companies due to decline in demand for FO in generation.
On the expense side, the refinery witnessed an increase of 48 percent year-on-year and 9 percent year-on-year in administrative expenses and distribution costs, respectively during 1HFY23. Meanwhile, other jumped by more than thirteen percent year-on-year in 1HFY23. ATRL also incurred a loss on financial assets in 1HFY23 compared to an impairment reversal in 1HFY22. However, finance cost supported the bottomline as it witnessed a decline of 67 percent year-on-year.
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