Attock’s refineries post hefty losses

Oil prices wreaked havoc on Attock group’s refineries that have already been suffering from lower offtake and falling demand due to the furnace oil crisis. Losses continue for the two refineries of Attock Group. Attock Refinery Limited (PSX: ATRL) posted a loss over Rs1 billion in 9MFY20, which however was lower by 42 percent year-on-year. National Refinery Limited (PSX: NRL) posted a loss of over Rs8 billion in 9MFY20, up by 7 percent year-on-year.

Weaker gross refining margins and significant inventory losses due to oil price fall in the period under review resulted in lower capacity utilization in general. This can be seen in falling sales revenues.  NRL saw a decline in not only its fuel segment but also its lube segment which came from lower demand for lube due to overall economic slowdown. ATRL’s earnings were additionally affected by its planned turnaround activity of all refining units. Despite lower finance cost, the earnings of the two refineries were affected by oil prices as well as exchange losses due to currency depreciation.

And the prospects for future are also not too optimistic. Coronavirus pandemic has left almost all sectors high and dry. March 2020 saw refineries shutting down as lockdown across the country has resulted in a plunge in the demand from the power sector, aviation sector and the transport sector. What might help the refining sector is some sort of bailout package from the government.