Pakistan Refinery posts profit after two years

Cost of sales stays lower than sales.

KARACHI: Pakistan Refinery Limited (PRL) switched to a profit of Rs905 million in the quarter ended December 31 compared with a loss of Rs1,024 million in the same period the previous year.

The entire sector’s gross refining margins have gradually improved since fiscal 2009 which helped the refinery post a profit after two years, said an analyst.

Cost of sales stayed lower than sales this time around, helping the company make gross profit. Gross profit stood at Rs805 million during October to December 2010 against loss of Rs94 million.

Other income of the refinery jumped more than 10 times to Rs218 million against Rs19 million posted in the same period last year, data sent by the company to the Karachi Stock Exchange shows.

Deemed duty currently at 7.5 per cent is likely to go down which will be a negative for the refinery sector and may hit Pakistan Refinery Limited’s next quarter earnings.

Deemed duty is a tax the government lets refineries charge in order to sell locally-produced diesel at the same price as imported diesel. This was imposed to protect refineries against volatility in international oil prices.

Published in The Express Tribune, February 15^th, 2011.