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Karachi: ATRL has reported a decrease in net profit after tax (NPAT) for the fiscal year 2024, with figures reaching PkR25.2 billion, marking a 14% year-on-year decline. The decline was attributed to reduced production levels and a drop in gross refining margins (GRMs), which averaged US$14 per barrel during FY24 compared to US$18 per barrel in the same period last year. Additionally, GRMs in the first quarter of FY25 were recorded at US$9.0 per barrel.
According to AKD Securities Limited, the refinery’s throughput for the year was 4,942 tons per day, down 2.8% from the previous year, with a capacity utilization of 75%, compared to 78% in the same period last year. The production share for MS, HSD, RFO, and other products stood at 34%, 34%, 17%, and 15%, respectively, during FY24. ATRL undertook a 30-day turnaround in February 2024 for essential maintenance, its first in five years.
In response to reduced ullage and throughput issues, the company exported 80,000 tons of low-sulfur fuel oil (LSFO) during the year, obtaining a US$60-70 per ton premium over the prevailing export price of RFO. The company plans to continue exporting 30,000 tons of cargo each month. However, ATRL has delayed signing the Refinery Expansion and Upgrade Project (RUEP) 2024 due to unresolved sales tax issues on imports. The management expressed readiness to proceed, contingent upon addressing issues such as smuggling and excess HSD imports by certain oil marketing companies (OMCs).
The post-upgrade addition of a Continuous Catalytic Reforming (CCR) unit aims to enhance MS production by 25% and meet EURO-V specifications for HSD. The company targets a debt-to-equity ratio of 70:30 for the upgradation project. Management is focused on upgrading to RON-92 and Euro-5 specifications, addressing penalties from authorities for producing MS (Ron-91) and HSD with higher sulfur content. The upgrade will also enable the conversion of unwanted Naphtha into more valuable Motor Gasoline.
Management noted that if ATRL does not enter into the RUEP 2024 implementation agreement, the policy mandates a reduction of the current 7.5% deemed duty on HSD to 5%. The new RUEP 2024 effectively removes the cap on payouts previously imposed under the 1997 Refinery Policy.
With crude oil production declining in the northern regions, currently standing at 39-40k barrels per day, ATRL has been allocated 5k barrels per day of Badin crude from the southern region. Importing crude oil remains unfeasible due to freight costs. The company acknowledged increased output in the northern regions following recent oil discoveries by exploration and production (E&P) companies. ATRL continues to use lighter/sweet crude, yielding higher portions of MS and HSD, and subsequently lower RFO.
Management declined to comment on rumors regarding potential mergers and acquisitions involving ATRL or any of its group companies.
The post ATRL Reports Decline in Profit Amid Lower Production and GRM Reduction. appeared first on Pakistan Business News.