Oil Refineries Ltd. (TASE:ORL), controlled by Israel Corporation (TASE: ILCO) and Israel Petrochemical Enterprises (TASE: PTCH), today reported a small increase in revenue and a steep drop in profit in the third quarter of 2018.
Oil Refineries, led by CEO Yashar Ben Mordechai, reported a NIS 16 million net profit for the third quarter, down 83%. compared with the third quarter of 2017. The company explained that periodic maintenance of its refining facilities, the effect of exchange rate differences on unprotected inventory, and lower profit margins were the main factors detracting from its profit.
Oil Refineries' weighted reference margin (the difference between sales of the company's basket of products and its raw materials, mainly the cost of a barrel of oil) was $6.20 per barrel, compared with $7.20 per barrel in the third quarter last year, when the effect of Hurricane Harvey on the refining and petrochemical business in the southern US pushed margins up to a record high.
Revenue was up 6% to $1.53 billion in the third quarter, helped by oil prices, which boosted prices of fuel and other products sold by Oil Refineries. Operating profit, however, plummeted 65% to $45 million.
The average price of a barrel of oil in the third quarter was $75, compared with $52 in the corresponding quarter last year, and reached $84 at the end of the third quarter. The price of a barrel of Brent oil has since declined to $68.
Oil Refineries' revenue grew 22% to $4.9 billion in the first nine months of 2018, while its operating profit dropped 12% to $295 million and its net profit was off 2% to $187 million.
Ben Mordechai said, "The third quarter results were achieved despite the planned periodic upkeep work on some of the company's installations, which was successfully completed during the quarter. The Oil Refineries group continually utilizes its operating advantages and achieves higher margins than the reference margins. The company's neutralized refining margin in the quarter was $8.10 per barrel, compared with the Bloomberg reference margin of $6.20 per barrel."
Published by Globes, Israel business news - en.globes.co.il - on November 13, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018