PSO Records a Drop in Net Profit During Q1 FY2019

Pakistan State Oil Company Limited, the country’s largest oil marketing company, announced its financial results for the 1st quarter that ended in September 2018. The company posted a net profit of Rs 4.18 billion, down by 16.73% from Rs 5.02 billion in the same period last year.

The Board of Directors also discussed key challenges the company has been facing in recent months including the reduction in other income consequential to lower interest income, higher exchange loss on account of PKR devaluation, and increase in finance cost due to higher markup rates and borrowing levels. These have resulted in a decline in the Company’s Profit after tax.

The company reported net sales of Rs 280 billion, up by 8.60% from Rs 258 billion due to the rising oil prices which were up 44% Year on Year.  The Gross profits during the quarter grew 19% YoY, which were higher, due to hefty inventory gains.

While it maintained its leadership position in the liquid fuels market with an overall share of 40% during the period under review. During the Q1FY19, PSO imported 48% of total industry imports and uplifted 34% of total refinery production in the country.

The Company has shown a healthy bottom line despite a mix of external and internal factors that have negatively affected the local industry’s growth. These factors include the influx of smuggled products, increasing international price trends, adulteration, heavy discounts offered by new entrants, and exploitation of the IFEM mechanism.

The company reported earnings per share of Rs 12.82 in the period under review, down from Rs 15.43 in the corresponding period last year.

PSO reported a decline in other income by about 56.15% to just Rs 970 million and finance cost surged to Rs 1.82 billion (141.52%), whereas, the share of profit from associates also declined by 24%. Operating expenses settled at Rs 3.58 billion, up 6% YoY Q1FY19.

As of September 30th, 2018, PSO’s total outstanding receivables (inclusive of LPS) from the Power Sector, PIA, and SNGPL stood at Rs. 310 billion compared to Rs. 316 billion as of June 30, 2018.

This is in addition to Rs. 21 billion recoverable from the Ministry of Finance on account of exchange rate differential on foreign currency loans and price differential claims. The management is continuously pursuing the Ministries of Energy and Finance for re-payment of PSO’s receivables.

PSO’s shares at the PSX were trading at Rs 278.23, (upper cap limit for the day) up by Rs 13.24 with a turnover of 2.42 million shares.

PSO has also announced that they have acquired 84,000,000 B class shares on 25th October 2018 (28.571% of the paid-up capital) of Pakistan refinery Limited at the Rate of Rs 10 per share from Shell Petroleum Company, United Kingdom pursuant of share purchase agreement dated June 16,2015.

Before this acquisition, PSO held 70,875,000 B class shares (24.10% of the paid up capital) of the company. After the above-mentioned acquisition, the total shareholding in the company is 154,875,000 B class shares, which present 52.67% of the total paid up capital of the company. B class shares are not listed on the stock exchange.