Byco Petroleum reports Rs1.9bn gross profit for FY19

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Byco Petroleum Pakistan Ltd (BPPL), the country’s leading oil company, has announced its financial results for the year ended 30 June 2019.

The last fiscal year was a tough period for Pakistan’s oil sector in which Byco Petroleum faced a multitude of challenges. The company’s gross turnover increased by 17pc from the previous year to Rs251 billion following an increase in oil prices and rupee devaluation.

Pakistan’s economic growth slowed considerably to nine-year lows of 3.3pc in the previous fiscal year. The oil sector witnessed a 22pc decline in consumption. The Pak Rupee’s value against the US Dollar fell by more than 30pc on a worsening current and trade account deficit. Due to the absence of any foreign exchange hedging mechanism, the energy industry incurred significant foreign currency losses. Byco Petroleum booked an exchange loss of Rs4.19 billion.

The company, however, tried to minimise its exposure to foreign currency but its efforts were hampered by the restrictions on the oil industry to obtain forward cover. Byco Petroleum managed refinery throughput to reduce foreign exchange losses while meeting the minimum volume commitments with its customers which pushed refinery utilization lower.

Due to the government’s policy of fixing petroleum products prices for a month using the exchange rate of the previous month, the devaluation also hurt Byco Petroleum’s refining margins. The volatility in international commodity prices in which Motor Gasoline traded below crude oil further squeezed the refining margins.

Meanwhile, the furnace oil consumption continued to decline as power generation companies replaced the fuel with LNG and coal. This dragged the oil refineries’ throughput and sales volume. Byco Petroleum also received a lower price for high speed diesel, as per the government’s criteria. However, efforts are being made to reach a viable solution.

In this backdrop, Byco Petroleum’s gross profits dropped by 78pc to Rs1.9 billion from R9.1 billion in the previous year. The company booked an after-tax loss of Rs1.68 billion, or Rs0.32 per share, for the year, down from a profit of Rs5.02 billion, or Rs0.94 per share, last year. Therefore, the directors did not recommend dividend for the year ended 30 June 2019.

However, Byco Petroleum is actively working to improve its operational and financial performance. The company is successfully converting all of its light naphtha into premium motor gasoline from its Isomerization Plant. The Single Point Mooring (SPM) facility continues to provide critical support to Byco Petroleum’s refineries and is alone responsible for handling nearly a quarter of Pakistan’s crude oil imports. Meanwhile, Byco Petroleum’s retail network continues to expand, with 28 new openings announced during the year, bringing the total to 379. Byco Petroleum remains committed to maintaining high standards of safety and contributing positively towards Pakistan’s development.

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