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Financial Reports &
Governance Other Information HENGYUAN REFINING COMPANY BERHAD l ANNUAL REPORT 2023 43

FINANCIAL REVIEW

MARGIN AND FINANCIAL PERFORMANCE
In the year under review, the Company reported a loss after tax of RM488.60 million as compared to loss after tax of RM157.60
million in the previous financial year. Refining margins continued to remain volatile during the year resulting in a full year oil margin
of USD0.40/bbl (FY2022: USD1.05bbl), including the effects of cracks and commodity swaps. Further analysis of the financial
performance is as follows:

REVENUE AND GROSS MARGIN

The Company recorded a total revenue of RM15.40 billion in FY2023 compared to RM21.10 billion in FY2022. The decrease
in revenue by RM5.70 billion resulted from a 17.50% decrease in average product prices and 14.30% decrease in sales
volume, which was affected by both the spillover effect of scheduled maintenance undertaken in December 2022 to early
2023, as well as the Major Turnaround (TA 2023) undertaken in July and August 2023.
Due to plant constraints as highlighted above, production declined as compared to FY2022. This hampered the
Company’s ability to maximise its margin for FY2023. In addition, volatility of Gasoil and Jet A1’s cracks especially impacted by
the adverse movement in the second quarter of 2023, coupled with hedging losses, further led to gross loss to RM0.1 billion
(FY2022: gross profit of RM0.3 billion).

BRENT OIL PRICE
Price in US dollars per barrel
140.00

120.00
100.00

80.00
60.00

40.00
20.00

-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2023 2022

In FY2023, the price of Brent crude oil held at an average by the Organisation of the Petroleum Exporting Countries
of USD83/bbl, which was USD18/bbl lower than its (OPEC) members. However, weak market sentiment over
corresponding FY2022 average. The crude oil price remained the global economy drove the crude oil prices down during
relatively stable throughout FY2023, ranging between the second quarter of 2023. Higher global oil demand and
USD75/bbl and USD94/bbl, as compared to FY2022. additional voluntary production cut by Saudi Arabia and
Russia in the third quarter of 2023 propelled the prices
Amidst fear of global recession since FY2022, the crude upward, reaching a peak at USD94/bbl in September 2023.
oil price in the first quarter of 2023 was further depressed Despite that, looming concerns in the fourth quarter of
by the collapse of US regional banks in March 2023. 2023 over the global economic growth caused a further
Nevertheless, April 2023 had seen a brief hike in the crude drop in the crude oil prices to USD78/bbl in December 2023.
oil price after the announcement on oil production cut made