National Refinery Limited (NRL) held its corporate briefing session today to discuss FY24 financial results and provide insights on the future outlook. The key takeaway from the call is as follows:
· In FY24, NRL earned a revenue of PkR308.8bn, a 3.4%YoY increase, however, incurred a second consecutive loss of PkR15.8bn (LPS:197.5), compared to a LAT of PkR4.5bn (LPS:55.8).
· Through revamping the fuel and lube-I refinery, the Company has boosted its crude oil processing capacity from 62,050 barrels/per day to 70,000 barrels/per day (23.1mn barrels/per annum).
· Company-wide GRMs were US$2.93 per barrel in FY24 compared to US$10.17 in the SPLY, whereas Lube segment GRMs fell to US$10.44 per barrel in FY24 compared to US$20.55 in the SPLY.
· Margins on HSD fell from 48% to 31% in FY24, whereas MS margins fell from 27% to 16% in FY24, as a % of Arab Light prices
· Refinery Production slate during FY24 stood as follows: 12%/39%/14%/5%/7%/8%/3%/12% for MS/HSD/RFO/Naphtha/LBO/Bitumen/Jet Fuels/others, respectively.
· HSD’s proportion in the production slate grew from 32% to 39%, in FY24. Management plans to raise HSD output further due to healthier margins while reducing the production of RFO & Bitumen.
· LC charges and Bank mark-up have started to tumble due to falling interest rates.
· Company initiated the exports of RFO during the outgoing year by shipping 22,882MTs.
· Volatility in fuel prices and margins alongside introductions of EVs into the domestic market are one of the company’s several challenges.
· Company plans to establish a CCR (Continuous Catalyst Reforming) unit alongside other associated units.
· Authorities introduced the ‘Brownfield Refinery Policy’ during the outgoing year; however, several amendments implemented in the federal budget FY25 have adversely impacted the IRR of the upgrade project.
· Management, however, remains optimistic, with SIFC spearheading the resolution. The company would reassess the upgrade project once the hindrances are resolved.
Outlook:
· The company is not in our formal coverage. However, company profitability may improve due to the focus on increasing the production of high-margin products while cutting down the production of loss-making ones. Moreover, the removal of impediments in the Refinery policy would allow it to follow through on its upgradation project, allowing a further increase in the production of the high-margin products in its portfolio.
Courtesy – AKD Research
