Byco Petroleum Pakistan Limited (Byco), the country’s biggest vertically integrated oil refiner, today reported financial results for the three months ending September 30, 2021. The company recorded net sales of PKR 34.4 billion and a gross profit of PKR 751 million for the quarter, as compared to net sales of PKR 33.4 billion and a gross profit of PKR 1.7 billion in the corresponding period last year. Byco recorded an after-tax loss of PKR 673 million, or Rs. 0.13 per share, as compared to an after-tax profit of PKR 453 million, or Rs. 0.09 per share a year earlier.

Byco experienced an increase in consumption of petroleum products which pushed margins on Motor Spirit and High-Speed Diesel higher. However, the positive impact got offset by the 8.5% decline in the value of the Pakistani Rupee against the US Dollar that led to exchange losses as well as by the severe weather conditions due to monsoon that pushed refineries throughput lower. Meanwhile, the Government imposed a 17% sales tax on crude oil while cutting down sales tax on finished products to 6% on MS and 10% on HSD. This anomaly in sales tax put the company’s cash flows under pressure.

Byco expects to improve earnings from the current quarter due to persistently strong demand for refined products, including Furnace Oil, and healthy refinery margins. The local currency’s value might also stabilize, with the possibility of the IMF package. Byco, as well as other refineries, have highlighted the issue of sales tax with the Government and the company is hopeful of a resolution in the near future.