PSO Records a Massive 64.5% Decline in Profits During Q3 FY2019

Pakistan State Oil Company Limited, which the largest Oil Marketing Company in Pakistan, has announced its results for the 3rd quarter that ended on March 31, 2019.

The company reported a 64.50% decline in its Q3 FY19 profits to Rs 1.67 billion as compared with Rs 4.70 billion in the previous year. This takes nine months’ earnings to Rs 5.92 billion which is down by 55.18% from Rs 13.22 billion in the previous year.

The net sales of the company for the nine months were reported at Rs 819 billion, which grew by 9.35% as compared with Rs 749 billion in the previous year.

The cost of sales of the company were reported at Rs795 billion, up by 10.42% as compared with Rs 720 billion in the same period last year which took the Gross profits down to Rs 23.88 billion, down by 17.28%  as compared with last year’s gross profit of Rs 28.87 billion.

Major reasons for the decline in profits include a dip in sales volume of black and white oil due to reduction in industry volumes and inventory losses due to the rise in international prices, lower interest income from the power sector, an increase in finance cost due to a sharp rise in the discount rate from the SBP, and higher average borrowing levels compared to the same period last year.

The finance cost of the company also made a huge impact on the profits as it increased by a whopping 84% to Rs 6.77 billion; almost double from Rs 3.68 billion.

Earnings per share of the company decreased to Rs 15.15 from Rs 33.80. The company also announced a cash dividend of Rs 5 per share, equivalent to 50% for the nine-month period.

The black oil volumes declined primarily due to power production shift towards RLNG whereas the drop in White Oil volumes includes access to the smuggled product, a decline in automobile sales, and a decrease in contribution from Agriculture and Large Scale Manufacturing (LSM) sector towards GDP.

The company also reported that during March 2019, the Government of Pakistan partially settled the mounting circular debt through a payment of Rs. 60 billion, however, receivables from SNGPL increased by Rs. 40 billion compared to June 2018.

The outstanding receivables (inclusive LPS) of Rs. 278 billion as of March 31, 2019 from the power sector, PIA and SNGPL against supplies of Furnace Oil, Aviation Fuels and LNG continue to place enormous liquidity pressure on the organization.

Despite numerous challenges, PSO maintained its leadership position in the liquid fuels market with an overall share of 40.8% (White Oil 39.2% and Black Oil 48.2%) during the period under review.

It also maintained the supply chain by importing 47% of total industry imports and uplifting 35% of total refinery production in the country to ensure an uninterrupted fuel supply to its customers.

PSO’s script at the bourse closed at Rs 202.87, which is down by R 4.46 or -2.15% with a turnover of 0.23 million shares on Monday.

  • Interesting…if auto sales are down, why do we have so many auto plants being built?

    Or is it just overproduction from too optimistic forecasts 2-3 years ago?

    Many auto dealers in Lahore claim they are selling lots cars. So who is not telling the truth?

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