Attock Refinery Limited (ATRL) held its analyst briefing today to brief investors about FY24 financial results and shed light on the future outlook:
- The company posted an NPAT of PkR25.2bn (EPS: PkR236.8) during FY24, down 14% YoY. The decline was driven by lower production alongside tapering off GRMs during the year, which averaged US$14/bbl during FY24 (vs. US$18/bbl in SPLY). Furthermore, GRMs during 1QFY25 were recorded at US$9.0/bbl.
- Refinery’s throughput during the year stood at 4,942tpd (down 2.8%YoY), representing a capacity utilization of 75% (vs. 78% in SPLY). Production share of MS/HSD/RFO/Others stood at 34%/34%/17%/15% during FY24.
- The company underwent a 30-day turnaround in February ’24 after five years for essential maintenance activities.
- The company exported 80k tons of LSFO during the year to address reduced usage/throughput issues. The company receives a US$60-70/ton premium over the prevalent export price of RFO. Consequently, the company plans to export 30k tons each month moving forward.
- The company has postponed signing the Refinery Expansion and Upgrade Project (RUEP) 2024 due to unresolved sales tax issues on imports. Management has expressed readiness to proceed with the policy, contingent upon removing hurdles such as smuggling and excess HSD imports by certain OMCs.
- Post upgradation, adding the Continuous Catalytic reforming (CCR) unit will enhance MS production by 25% while also meeting EURO-V specifications for HSD. The company is targeting a debt-to-equity ratio of 70:30 for the upgrade project.
- As per management, they are fully focused on upgrading to RON-92 and Euro-5 specifications. The authorities are currently penalizing them for producing MS (Ron-91) and HSD with higher than allowed sulphur content. Furthermore, upgradation will enable the conversion of the unwanted naptha into more value-added Motor Gasoline.
- Management noted that if ATRL does not enter into the implementation agreement of RUEP 2024, the policy stipulates a reduction of the current 7.5% deemed duty on HSD to 5%.
- The new RUEP 2024 is currently in effect, effectively removing the payout cap previously imposed under the 1997 Refinery Policy.
- Crude oil production in the northern regions has declined, with the current supply at 39-40k bpd. As a result, the company has been allocated 5k bpd of Badin crude from the southern region. Additionally, importing crude oil is currently unfeasible due to freight costs.
- The company has acknowledged that recent oil discoveries by E&P companies in the northern regions have increased output in that area.
- The company uses lighter/sweet crude, which usually yields high portions of MS and HSD (subsequently low RFO).
- Management declined to comment on the rumours regarding potential M&A activities involving ATRL or its group companies.
Courtesy – AKD Research
