Lahore, December 11, 2020 (PPI-OT): Rating incorporates the company’s strategic importance to economy through its operations extended to, transportation of petroleum products through integrated Pipelines, Refining, and Marketing, providing efficient, low-cost, and environment-friendly energy solutions. PARCO is also contributing substantially towards socio-economic benefits and Foreign Exchange savings; its low business risk emanates from its leading market position, strong demand of its products and its advanced Refinery Complex technology.
Volatility in International Oil prices remained as one of the key challenges along with adversities of COVID-19 Pandemic. The ratings, however, recognize PARCO’s aptness and timeliness in subduing challenges on its financial risk profile. Company investments in dollar based TDR cover its financial risk profile to a maximum level and also acts as an implied hedge against exchange rate fluctuations. In 3MFY21, the Company earned a net profit of ~PKR 3.2bln supported by dividend income from subsidiaries and joint venture company. Moreover, return on investments also reflected positively on the company’s performance.
The ratings take into account PARCO’s strengthened position in midstream and downstream sector resulting through acquisitions and completion of expansion projects. The company went through a capacity enhancement phase taking the optimum capacity level from100,000 barrels per day (bpd) to 120,000 bpd, however this expansion is expected to start paying off in near future as the country wide lockdown situation has eased out. Additionally, PARCO also embarks on setting a new state-of-the-art 250,000 bpd Coastal Refinery Project which is at a preliminary stage. Strong capital structure and sizable equity has, historically, enabled the company to absorb hefty capital expenditures.
Effective management of upcoming projects, consistency in Government policies and technological improvisation will remain critical for the ratings. Meanwhile, sustained competitive positioning is also imperative.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com
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