Corporate results: Byco Petroleum on recovery road, posts profit of Rs414m

Improved refining margin plays key role in turnaround during 1QCY15 .

KARACHI:

Byco Petroleum on Monday reported a net profit of Rs414 million in the January-March 2015 quarter – a recovery from the last few years which saw the downstream integrated petroleum company book massive losses.

It had incurred a loss of Rs536 million in the same quarter previous year. Company officials and analysts say the improvement in Byco’s fortune reflects an efficient management of oil inventory and higher throughput of its refinery.

“We believe the plant efficiency is improving. A gross profit of Rs2.1 billion points toward that,” said Shajar Capital Head of Research Yawaruz Zaman. “I see this sustaining in coming quarters.”

Improved refining margin, which is the difference between price of crude oil and petroleum products and effective management of inventory, played a key role in this recovery, he said.

Byco’s bottom-line could have been better if not for high financial charges. The financial cost is not much of a burden on its cash-flows at the moment but it continues to scar the balance-sheet.

The selling and distribution expenses more than doubled to Rs882 million, reflecting the company’s aggressive approach towards taking its petroleum products to the market.

Byco Petroleum’s financial statements include the sales and earnings of its 35,000 barrels per day refinery, a petroleum marketing business, which has over 250 retail outlets and an oil terminal.

The company does not give a breakup of revenue and income on the basis of its operations with quarterly results but, as per financial results of last year, refining operations makes up for at least 55% of the revenue.

A senior company official informed that Byco’s gross profit margin was the highest in the industry. “We were worst hit when oil prices fluctuated in 2008. So we have learned our lesson and we are more efficient at managing oil stock.”

The official also said that real benefit of the capital expenditure, which Byco undertook on the supply chain, starts to show as throughput of the refinery and overall company sales go up.

But the company still has a long way to go to clear its accumulated loss of over Rs25 billion.

After going up for the past few days, Byco’s share shed 6% to close at Rs12.21. It was the most active stock for the day.

Published in The Express Tribune, May 5^th,  2015.

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