Byco petroleum declares after tax loss of Rs 2.674bn in nine-month amid weak demand

The company is experiencing tough market conditions as the spread of COVID-19 hurts demand but can withstand this period

KARACHI: Byco Petroleum Pakistan Ltd (BPPL) Monday posted after tax loss of Rs 2.674 billion compared to profit of Rs 719.620 million a year earlier due to the negative impact of the exchange rate and an increase in inventory losses.

In its financial results for nine months, the company declared its gross sales of Rs 192.1 billion, up from Rs 182.9 billion in the same period of the previous fiscal year. The rise in KIBOR rates pushed finance costs higher, said a company statement.

However, company registered a gross profit of Rs 1.199 billion in July-March 2019-20 compared to Rs 3.032 billion same period last year.

Due to these factors, the company reported a net loss of Rs 2.67 billion (Rs 0.50 per share) for the nine months ending March 31, 2020, from a net profit of Rs 719 million (Rs 0.14 per share) in the corresponding period of 2019.

The global oil industry is currently going through one of the most challenging periods ever. The Brent oil price fell from $67 per barrel in early-January to $23 by late-March as the spread of COVID-19 and the ensuing travel restrictions and strict lockdowns enacted by various governments around the world weakened demand for crude oil as well as oil products.

Crude oil consumption dropped by 22% in Pakistan. The High Sulfur Furnace Oil (FO) demand has remained low for the last three years due to the decrease in consumption from the power producers.

FO price fell $30 per barrel below crude oil in the international markets following the implementation of the IMO 2020 regulation. Some recovery was witnessed in the current quarter but it got disturbed due to the global oil market turmoil.

Despite facing unfavorable conditions, the company said Byco Petroleum continued to operate consistently during the reporting period. Thereafter, as the petroleum demand weakened in the country, the company temporarily shifted its facilities into cold circulation.

 However, the government’s decision to stop the Oil Marketing Companies from importing oil products, which will be implemented subsequent to the reporting period, will aid domestic refineries and enabled Byco Petroleum to resume operations from the current quarter. The policy measures taken by the State Bank of Pakistan will also help businesses withstand the economic downturn.

Byco Petroleum appreciates the Government of Pakistan’s efforts to support the oil refining industry during this crisis. The company stands firm with Pakistan to fight the spread of COVID-19 and expects to emerge in a much better position from this challenge.

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