Rising cost of sales forced National Refinery Ltd, Pakistan’s only base oil refiner, to announce losses of Rs 15.79 billion (U.S.$56.64 billion) during the fiscal year ending June 30. The news caused the company’s stock price to fall by almost 4.6% to a low of Rs218 per share.
The company was down Rs 4.46 billion in the previous fiscal year.
Global refining margins were low in the first half of 2024, after unprecedented highs in the two years before.
The losses were incurred despite higher revenue, according to National Refinery. Net revenue from contracts rose to Rs308.84 billion up from Rs298.81 billion in FY23, an increase of more than 3%.
The company blamed its disappointing performance on an increased cost of sales, which rose to Rs 316.6 billion, up nearly 11% from Rs 285.61 billion in fiscal year 2023. As a result, gross loss was Rs 7.76 billion, compared with gross profit of Rs 13.2 billion in FY23.
National Refinery produces petroleum products from three complexes comprising two base oil streams and a fuel stream. The company has capacity to make 76,200 metric tons per year of API Group I oils.
The refinery’s “other income” declined nearly by 23% to Rs 347.4 million in FY24, compared to Rs 450.6 million in FY23. It was not immediately clear what National Refinery’s other income comprises.
Meanwhile, the company’s operating expenses shrank by 26% to Rs 1.8 billion in FY24, compared with Rs 2.5 billion in FY23. Despite the decline in expenses, the company posted an operating loss of Rs 9.3 billion in FY24, compared with an operating profit of Rs 11.1. billion FY23.
Adding to the losses was a net finance cost of Rs 9.3 billion, which the company incurred in FY24.
Pre-tax loss was Rs 18.65 billion in FY24, compared with Rs 5.12 billion in the same period last year.