National Refinery Limited (PSX: NRL) reported a significant net loss of Rs7.24 billion [Loss Per Share: Rs90.50] for the quarter ending September 2024, a sharp contrast to the profit of Rs3.2 billion [Earnings Per Share: Rs40.05] recorded in the same period last year (SPLY). The loss comes as the company faced rising costs and declining revenue.
The company’s revenue for Q3 FY24 fell by 9.3% to Rs66.98 billion, down from Rs73.83 billion in the corresponding period of the previous year. The decline in sales, coupled with a 10.2% rise in the cost of sales, led to a gross loss of Rs6.3 billion. This represents a drastic turnaround from the Rs7.35 billion gross profit recorded in Q3 FY23.
Rising Costs and Expenses
NRL’s cost pressures were evident across several financial metrics. The cost of sales increased significantly, contributing to the company’s negative gross margin. Furthermore, finance costs nearly doubled, soaring by 97.0% to Rs2.89 billion compared to Rs1.47 billion in the same quarter last year. This increase in finance costs further eroded profitability, exacerbating the company’s financial difficulties.
On the operational side, the company’s administrative expenses showed only a slight increase of 0.2%, amounting to Rs279.5 million in Q3 FY24. However, selling and distribution expenses surged by 108.6%, reaching Rs209.68 million, adding to the company’s expense burden.
Other Income and Taxation
Amid the financial challenges, NRL’s other income saw a 39.2% rise to Rs105.8 million, up from Rs76.01 million in Q3 FY23. This increase provided some relief but was insufficient to offset the overall losses.
A positive aspect for the company was a tax credit of Rs2.34 billion in the current quarter, compared to the tax expense of Rs1.98 billion in the same period last year. Despite this, the company still reported a significant loss before taxation of Rs9.57 billion.
Outlook
The financial results reflect the challenges faced by National Refinery Limited as rising costs, especially in raw materials and finance, coupled with declining sales, have hit profitability hard. The company’s gross margin, operating performance, and rising finance costs suggest that NRL will need to address these headwinds in the coming quarters to regain its footing.
NRL’s unconsolidated financial results paint a picture of an industry grappling with cost pressures and an uncertain market environment. Going forward, the company’s ability to manage these rising costs while potentially increasing revenue will be key to stabilizing its financial performance.
HERE IS THE FINANCIAL SNAPSHOT FOR NATIONAL REFINERY LIMITED (NRL) COMPARING Q3 FY24 WITH Q3 FY23
- Sales: NRL’s sales dropped by 9.3%, declining from Rs73.83 billion in Q3 FY23 to Rs66.98 billion in Q3 FY24.
- Cost of Sales: The cost of sales increased by 10.2%, rising to Rs73.27 billion in Q3 FY24 from Rs66.47 billion in the same period last year.
- Gross Profit / Loss: The company reported a gross loss of Rs6.30 billion in Q3 FY24, compared to a gross profit of Rs7.35 billion in Q3 FY23, marking a significant downturn.
- Administrative Expenses: Administrative expenses remained relatively stable, increasing by just 0.2%, from Rs278.9 million in Q3 FY23 to Rs279.5 million in Q3 FY24.
- Selling & Distribution Expenses: These expenses more than doubled, surging by 108.6%, from Rs100.5 million last year to Rs209.68 million this year.
- Other Income: Other income rose by 39.2%, from Rs76.0 million in Q3 FY23 to Rs105.8 million in Q3 FY24.
- Finance Cost: Finance costs almost doubled, increasing by 97.0%, from Rs1.47 billion last year to Rs2.89 billion in the current quarter.
- Net Profit / Loss: NRL reported a net loss of Rs7.24 billion in Q3 FY24, a sharp contrast to the net profit of Rs3.20 billion in Q3 FY23.
- Earnings / Loss Per Share: The loss per share in Q3 FY24 was Rs90.50, compared to earnings per share of Rs40.05 in the same period last year.
This financial overview highlights the company’s declining revenue and increasing expenses, which have contributed to its substantial losses.
