Oil Refinery Stocks Tremble! High Oil Price Is Not a Promise for Higher Profit
Is this an implication of the higher oil price does not mean the higher profit for refinery companies? 
Is this an implication of the higher oil price does not mean the higher profit for refinery companies?
24 พ.ค. 2562

Listed oil refinery companies had high expectation from investors for a nice 1Q19 financial statement when faced with a stock loss and a plummet of net profit in the previous quarter.
When the oil price started to incline since the end of 2018 through the beginning of 2019, it gave new hope for investors who expected that oil refinery companies would record a profit from its oil stock.
However, after the reports of the first quarter financial statement, it appeared to be a disappointment for investors.
 
IRPC Public Company Limited (IRPC) recorded a net profit of THB 153 million, decreased 94% from the same quarter of last year which recorded at THB 2,752 million. The company made only THB 516 million of profit from oil stock, much lower than expected.
Meanwhile, IRPC’s gross refinery margin (GRM) plunged from 14.42USD/bbl to 9.94USD/bbl, as well as the price of petrochemical spread that also declined.
 
Bangchak Corporation Public Company Limited (BCP) also reported a disappointing statement as well. The company booked a net profit of THB 213.95 million, declined 82% when compared to the same quarter of 2018 at THB 1,167.85 million. Even though its subsidiary, BCPG Public Company Limited (BCPG) had a nice growth and profit along with the support of the power plant business, the contribution appeared to be not enough.
Which led to the record of THB 2,181 million of gross profit margin, sharply decline from the same quarter of 2018 which recorded at THB 3,328 million.
The main reason for this plummet was due to a decrease of GRM from 6.37USD/bbl to 3.49USD/bbl when compared with the same quarter of last year, and also a stock loss of THB 9 million.
 
As for Thai Oil Public Company Limited (TOP), the company reported a net profit in the first quarter of 2019 at THB 4,408 million, decreased 21.39% when compared to a net profit of THB 5,608 million in 1Q18. Even the stock gain and the reversal of write-down to NRV on petroleum inventory rose by THB 2,092 million and THB 1,424 million, respectively, they did not help much while GRM sank from 8.2USD/bbl to 5.2USD/bbl YoY.
The causes of these declines were the fall of the price differential in refineries, especially the decline of benzine price, base oil price, and fuel oil from oversupply. Thus, made TOP  another disappointment in refinery companies.
 
Meanwhile, PTT Global Chemical Public Company Limited (PTTGC) announced a profit in 1Q19 at THB 6,442.65 million, decreased from THB 12,387.80 YoY. The disappointment in PTTGC was not less than any other companies as investors assumed that it was the best in risk management when the company had products from crude oil and natural gas.
Turned out, PTTGC had GRM at 3.22USD/bbl, plunged from 6.15USD/bbl YoY, not to mention a decline of 24% of refined petroleum products.
 
The only company to be able to save face was Esso (Thailand) Public Company Limited (ESSO) which had an increase of 8% of net profit at THB 1,027 million when compared to a profit of THB 953 million in 1Q18.
The outstanding performance which led to a growth in profit was due to its petrochemical business that recorded a sales revenue of THB 222 million, a turnaround from THB 138 million of loss in 1Q18. However, the GRM of ESSO also faced the same fate as other companies, reported at 4.5USD/bbl from 8.5USD/bbl.
 
Is this an implication of the higher oil price does not mean higher profit for refinery companies? 