Attock Refinery Limited is a subsidiary of Attock Group. It was incorporated as a private limited company in 1978. Later in 1979, it was converted into a public limited company and listed on all the three stock exchanges of the country. Attock Group is a fully integrated group. It has a presence in the E&P sector via Pakistan Oilfields Limited, and its refinery business is engaged in refining of crude oil and supplying of refined petroleum products, pioneering the crude oil refining as early as 1922.
ARL's current nameplate capacity stands at 43,000 barrels per day (bpd), and it possesses the capability to process lightest to heaviest crude.
REFINERY PRODUCTS Attock Refinery Limited produces a wide range of petroleum products including both energy and non-energy petroleum products. These include Liquefied Petroleum Gas (LPG), unleaded Petroleum Solvent Grade (PMG), naphtha, motor gasoline, JP-1, JP-8, kerosene oil, High Speed Diesel (HSD), Light Diesel Oil (LDO), Furnace Oil (FO), Low Sulfur Fuel Oil (LSFO) paving grade asphalts, etc. The firm is also engaged in exporting of various high grade and high specification products including naphtha, kerosene oil, HSD and JP-8.
HIGHLIGHTS FY13 The refinery industry improved during FY13 where profitability gained momentum after weak FY12. Lower refining margins and the notorious circular debt riddle hampered the operations of the downstream sector in the country where the profitability of the refining sector slipped in FY12. However, during FY13, the profitability of the refining sector gained pace on the back of not only positive but also better Gross Refining Margins (GRMs) due to better petroleum product prices.
The profitability during FY13 also improved with rising crude prices as well as from reduction in the finance cost by more than 40 percent during FY13 versus FY12. A major cause of concern for the oil and gas sector has been the circular debt. During FY13, it remained a major cause of concern for the refinery as well. However, the end of June settlement of the circular debt by the government adjusted trade debts accumulating to over Rs 15 billion against the creditors, which gave the company breathing space.
ARL's capacity utilisation increased from 99.5 percent in FY12 to 100 percent in FY13. Due to the installation of a new charge heater, the company was able to increase its nameplate production capacity by 1,000 barrels per day (bpd). Its throughput jumped to 14.989 million barrels, up by two percent year-on-year. This was due to increased production from the northern part of the country that helped the refinery remain buoyant, and no crude oil from the southern region was required; Tal Block crude in the northern part was a significant contributor to the refinery operations.
REFINERY OPERATIONS 9M FY14 In FY13 a total of 14,931 million barrels of crude oil was received from 42 various fields. As a result, the firm was able to supply 1,864 million tons of petroleum products during FY13. During FY14 so far, the company has been able to continue to operate at 100 percent capacity which results in smooth supply of petroleum products by refining the volumes of crude oil coming from the northern Pakistan.
The refining throughput during the nine-month period (9M FY14) was 11.333 million barrels, almost similar to what it was during 9M FY13. Sales volumes were 10.786 million barrels, versus 10.858 million barrels during 9M FY13
FINANCIAL PERFORMANCE 9M FY14 Even though the firm's profitability improved during FY13 due to the government's efforts to control the inter-corporate circular debt, the progress of the company during 9M FY14 appears to slip once again. The growth of six percent in company revenues during 9M FY14 is primarily attributable to relatively stable crude prices as volumes remained flat. In terms of products, motor gasoline and high speed diesel make up for the majority of the sales mix, which is above 50 percent of the total sales revenue
The bottom line of ARL plunged by more than 40 percent during 9M FY14 vis-à-vis 9M FY13. Even the non-existent finance cost couldn't lift the profits of the firm. This was because of weakening earnings from the refinery operations and had it not been the non-refinery operations, the firm would have been in a loss for the period. The gross margins turned negative, while the net margins slipped from 2.63 percent in 9M FY13 to 1.42 percent in 9M FY14. Furthermore, the firm also witnessed contraction in other income which reduced by almost 50 percent year on year during 9M FY14.
OUTLOOK Even though the profitability during FY14 has not been very impressive, ARL has optimistic expansion plans for the coming times, which will serve as a catalyst for the earnings of the company. Attock Refinery's expansion plans and up-gradation projects like the installation of isomerization plant that will allow the company to convert its naphtha into premier motor gasoline, a value-added product, are progressing.
The company is also looking into Pre-flash, Diesel Hydro Desulphurization unit and expansion of its captive power plant. This would increase its refinery capacity, its motor gasoline production and help the refinery produce euro II compliant low sulphur diesel. The projects are expected to be completed by 2015, and will bode well for the refinery as demand for petrol and diesel are expected to remain buoyant amid curtailing usage of CNG.
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ATTOCK REFINERY LIMITED
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FY12 FY13 9MFY14
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Profitability
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Gross profit margin (RHS) 1.31 % 1.86 % -0.21 %
Net profit margin 1.77 % 2.40 % 1.42 %
Return on PP&E 27.80 % 39.02 % 14.33 %
Return on total assets 2.92 % 6.06 % 2.62 %
Return on equity 11.67 % 14.59 % 9.39 %
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Liquidity and Solvency
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Current ratio (LHS) 1.01 1.09 1.06
Liabilities to Assets 0.75 0.58 0.60
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Efficiency
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Fixed asset turnover 15.69 16.27 10.10
Total asset turnover 1.65 2.53 1.85
Receivables turnover 4.02 4.90 8.17
Payables Turnover 2.85 3.31 3.88
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Market
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EPS (refinery operations) 13.44 30.69 -0.02
EPS (non refinery operations) 18.63 15.22 21.66
Total (Rs/share) 32.07 45.91 21.64
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Source: Company Accounts
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