Corporate results: National Refinery surprises market

Overall gross margin fell 300 basis points to 4% in the period under review compared with 7% similar period last year.

KARACHI:

National Refinery’s result announcement made jaws drop as profit fell by 39% while analysts projected them, on average, to rise by 39%.

Investors offloaded the stock at the Karachi Stock Exchange on Friday, taking the stock price down 5% to its lower limit of the day. The stock price lost Rs17.95 in a single day to close at Rs341.14.

The major culprit behind this significant decline is the fuel segment which suffered on account of inventory losses, said Topline Securities analyst Nauman Khan. Although detailed accounts are yet to be released, the fuel segment is likely to post a loss of approximately Rs300 million against a profit of Rs236.9 million, added Nauman.

National Refinery Limited’s net profit stood at Rs828.3 million in the first quarter of fiscal 2012 against Rs1,349 million posted in the same period last year.

Overall gross margin fell 300 basis points to 4% during the period under review compared with 7% similar period last year.

In addition to inventory loss, company’s financial charges escalated two folds to Rs196 million, which is primarily on account of depreciation of the rupee by 1.6% against the dollar.

Subject to detail accounts, the company’s lube earnings would be some where around Rs1.1bn (Rs14) a slight improvement from same period last year but significantly lower by 36% from the preceding quarter.

Published in The Express Tribune, October 22^nd, 2011.