Byco Petroleum Limited has recorded a decrease of 47 percent in its profitability during the first quarter of the financial year 2020-21 due to a drop in sales of petroleum products and its demand in the local market.
According to the financial results, the company generated a net profit of Rs. 453 million from July to September versus a profit of Rs. 870 million recorded in the same period in the last financial year. The company’s earnings per share stood at Rs. 0.09 compared to Rs. 0.16 last year.
The operations of the company were affected mainly by torrential rains throughout the country that not only uninterrupted the supplies of the petroleum products but also caused the closure of refinery units for a brief period.
The company recorded gross sales of Rs. 48.4 billion as compared to Rs. 62.9 billion in the same period last year which shows a reduction of 23 percent, primarily due to over 30 percent decline of oil prices in the international market.
The company earned a gross profit of Rs. 1.7 billion as compared to Rs. 2.08 billion last year which was due to PKR appreciation in the first quarter of the previous year which resulted in a significant exchange gain. With the easing of COVID-19 lockdowns globally, oil prices in the international market remained relatively stable during the quarter.
Margins on petroleum products, however, portrayed a mixed trend as margins on Premier Motor Gasoline (PMG) and Furnace Oil (FO) showed improvement whereas margin on High-Speed Diesel (HSD) fell during the period.
This trend is expected to continue as virus cases have started increasing again globally which will eventually put pressure on oil consumption and its prices. Local demand for petroleum products bounced back in the current quarter after the normalization of economic activity in Pakistan though refineries were not able to fully realize the benefit due to torrential rains in the current quarter.
With effect from September 1, 2020, the government revised the pricing formula of gasoline and diesel and now the product prices are determined bi-monthly as opposed to once a month. The requirement for refineries to follow Pakistan State Oil’s (PSO) cost of import has also been done away with.