Refineries post mixed earnings

Attock Refinery proves to have a better mix than National Refinery.

KARACHI:

National Refinery Limited profits slipped 55% to Rs2.2 billion in fiscal 2012 so far on the back of volatility faced by one of its segment.

The major culprit behind this decline in company’s earnings is the lube segment, which faced adverse volume as well as margin variance, said Topline Securities analyst Nauman Khan.

Although detail accounts have not been released, lube segment is likely to post an earning of approximately Rs2.2 to 2.5 billion against profit of Rs4.1 billion in the same period last year.

The company’s fuel earning is also likely to decline on account of reduced petroleum products spreads.

Gross margins narrowed to 3.1% during July 2011 to March 2012 compared with 6.7% in the similar period. In addition to the decline in gross profitability, the company’s financial charges inflated by more than six times to Rs795 million, on account of depreciation of the rupee by 5.1% against the dollar. Other income – a key supporter of the bottom line – also remained stagnant as that of last year at Rs1.8 billion

In an announcement by another major refinery, Attock Refinery posted an increase of 34% in profit to Rs2.61 billion in the first nine months of fiscal 2012.

Investors seemed to dislike the outcome of both the announcements as stock value of both the refineries well. National Refinery fell Rs2.64 to close at Rs241.27 and Attock Refinery declined Rs0.95 to end at Rs126.09 during trade at the Karachi Stock Exchange.

Published in The Express Tribune, April 19^th, 2012.