PRL Achieves Highest Profit and Production in H1 2023

Staff Report

Pakistan Refinery Limited (PRL) proudly announces its outstanding financial results for the half-year ended December 31, 2023.

PRL is pleased to present a remarkable performance, showcasing the highest-ever profit and production milestones in the first half of the fiscal year in the company’s history.

During the first half of the financial year 2023, PRL achieved an exceptional profit after tax of Rs. 6.51 billion, a substantial increase from Rs. 0.76 billion in the corresponding period of the previous year (July to December 2022).

This extraordinary financial achievement underscores the company’s robust operational efficiency and strategic initiatives.

The Refinery attained a significant production milestone by recording its highest-ever half-yearly production for High-Speed Diesel (HSD) and MS 92, reaching 376,653 Metric Tons and 152,974 Metric Tons, respectively.

This remarkable production performance demonstrates PRL’s commitment to meeting market demands and setting industry benchmarks.

In August 2023, the Government of Pakistan introduced the Refining Policy for Existing/Brownfield Refineries, 2023, providing refineries with incremental incentives for upgrading facilities and producing eco-friendly fuels meeting Euro-V specifications.

PRL, aligning with this policy, has entered into necessary agreements with the Oil and Gas Regulatory Authority (OGRA) for Refinery Expansion and Upgrade Project (REUP) and opening of Escrow Account, thus positioning itself for future incentives.

PRL’s REUP remains a top priority, with significant progress in technical licensing, engineering agreements, and Front-End Engineering Design (FEED) work.

The company is committed to expanding its crude processing capacity from 50,000 to 100,000 barrels per day.

Furthermore, the United Energy Group (UEG) of China is carrying out due diligence of PRL for potential strategic investment, following the signing of a Memorandum of Understanding (MoU) in October 2023 in Beijing in the presence of the Pakistani Prime Minister.PRL Selects Contractors To Double Refining Capacity

The Board expresses gratitude to all stakeholders, especially the Government of Pakistan, for their continued support, acknowledging their pivotal role in the ongoing success and expansion of the Refinery.

PRL remains dedicated to upholding the highest standards of Health, Safety, Environment, and Quality, ensuring efficient and safe operations for the benefit of all stakeholders.

Sherman Research in a report said that

Pakistan Refinery Limited (PRL) reported net earnings of Rs2bn (EPS Rs3.2) during 2QFY24, compared to a loss of Rs0.3bn (loss per share of Rs0.4) during the same period last year.

The earnings exceeded our estimates significantly. While detailed accounts are yet to be released, initial estimates suggest that PRL operated at a higher capacity in December, with earnings calculated based on production numbers from Oct-Nov 2023.

Additionally, PRL might have recorded a substantial exchange gain during 2QFY24 due to the sharp appreciation of PKR against the USD, more than offsetting the impact of inventory loss.

We estimated an inventory loss of Rs3bn during 2QFY24 due to a sharp decline in international crude oil prices. However, there are chances that the actual inventory loss might be lower than our estimates,” it said.

Predicting exchange gains/losses is challenging as it depends on the timing of crude oil imports.

Nevertheless, it is believed the company’s gross profit may include a higher exchange gain, resulting in a higher gross margin of 5.1% during 2QFY24. It is worth recalling that from mid-Sep 2023, PKR appreciated strongly against the US dollar.

On the flip side, higher other income of Rs1.6bn diluted the impact of operating expenses, which stood at Rs1.6bn during 2QFY24. The increase in operating expenses is likely due to research costs on Refinery Expansion and Upgradation.