Pakistan Refinery Limited (PRL) reported its highest-ever profit after tax of PKR 15.8 billion in FY26, processing 1.72 million tons of crude oil and achieving record production of high-speed diesel (HSD) and motor spirit (MS), according to insights management shared during a corporate briefing cited by AHL Research.

Management attributed the strong turnaround from a PKR 4.7 billion loss in FY25 to improved gross refining margins and a favorable product mix, noting that refinery profitability depends more on margins than revenue growth.

Despite the strong performance, furnace oil remains a major challenge. PRL produced 433,000 tons of furnace oil in FY26, with nearly all sales exported because domestic demand was weak. HSD remained the refinery’s largest product, accounting for 48% of total output.

According to AHL Research, geopolitical tensions and disruptions around the Strait of Hormuz pushed up crude and petroleum product prices, while higher freight and insurance costs added approximately PKR 700 million to expenses.

Management said PRL is pursuing crude supply diversification through ADNOC, Libyan and Nigerian grades while maintaining a mix of term and spot cargo purchases to optimize procurement costs.

On the refinery upgrade project, PRL disclosed that FEED is complete, it has received EPC bids, and it has issued a conditional Letter of Intent to the selected contractor. However, financial close remains pending due to geopolitical uncertainty and limited lender appetite for fossil-fuel projects. The company is evaluating a combination of debt and equity financing, including a possible rights issue.

AHL Research noted that while FY26 results reflect a significant operational and earnings recovery, successful project financing and refinery modernization will be critical for reducing furnace oil dependence and supporting long-term profitability.