FY23 was a difficult year for the economy of Pakistan. The downstream oil and gas sector’s earnings were significantly impacted from the weak economy, rising inflation, fuelling petroleum prices, liquidity crunch, nose-diving currency, and falling demand. Pakistan Refinery Limited’s expansion project also hit a roadblock early on during the year due to a shortage of dollars and delayed payments as a result. PRL has been working on Refinery Expansion and Upgrade Project to produce Euro-compliant petrol and diesel, and expand the crude processing capacity by double, and upgrade from hydro skimming to deep conversion refinery. The refinery posted a significant decline in earnings for the year due to the abovementioned factors
However, in the recently announced financial performance for 1QFY24, PRL announced a recovery in earnings with a jump from Rs1 billion in 1QFY23 to Rs4.5 billion net profit in 1QFY24. The growth in the company’s earnings emanated from the top where PRL posted a revenue growth of 23 percent year-on-year primarily due to higher prices of petroleum products. Gross profit grew by more than 6 times during the period with gross margins jumping from 2.2 percent in 1QFY23 to 9.6 percent in 1QFY24.
PRL’s bottomline was higher by 4 times despite the rise other expenses and finance cost. the company. The company’s net margins were up by 340 basis points. PRL has had a good start to FY24. The company has made key developments on the expansion and upgradation front. it has inked an agreement with the United Energy Group of China for refinery expansion and upgrade project where China will invest $1.5 billion in the company’s capacity. The upgrade to capacity will make PRL one of the largest refineries in the country in terms of refining capacities. The company has also struck a long-term supply contract for crude oil with Russia, with the first cargo expected to arrive this year only.
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