Tüpraş profit falls sharply due to rising costs, penalty

ISTANBUL

Turkey’s sole refinery Tüpraş has announced its 2013 net profit fell to 1.2 billion liras, dropping below forecasts due to low margins and penalty payment. DHA photo

Turkey’s sole oil refiner, Tüpraş, posted an 18 percent fall in its net profit to 1.19 billion Turkish Liras in 2013 due to low margins and a competition board fine.

The company’s profit was expected to fall after Turkey’s competition regulator fined the refiner 412 million liras ($186 million) and due to currency developments that prompted higher spending, but the figures announced Feb. 19 came even lower than market forecasts, which were around 1.21 billion liras.

The company cited a retreat in refinery margins, a drop in operating profit, a rise in the foreign exchange rate, the impact of the cost of the currency difference and a penalty from the Competition Board as reasons for the drop in profits

The refiner, owned by one of Turkey’s largest business groups, Koç Holding, also said its sales fell 3 percent to 41.8 billion liras, in parallel with a drop in oil prices and a sales volume contraction.

The capacity utilization at the plant also plunged from 81.6 to 79.1 percent on an annual basis.
Crude oil closed out 2013 on a rather bearish note due to an abundance of supply, with Brent crude finishing at around $110, after starting off the year at $113 per barrel.

The WTI crude oil price advantage and low natural gas cost enabled U.S. refineries to take European and Mediterranean markets, causing gasoline exports of Tüpraş to dry up, the company said.

Tüpraş also said the impact of sanctions on Iran and continuing instability in Iraq, in combination with Ural crude oil’s focus on the Asian market, had raised heavy crude oil prices.

The Mediterranean Refinery Margin, which was $4.21 per barrel, dropped 60 percent to the $1.67 per barrel level. Tüpraş‘s net refinery margin outperformed the Mediterranean reference margin to come in at the $2.45 level after falling $0.86 per barrel compared to 2012.