KARACHI: Surpassing market expectations, Pakistan State Oil (PSO) posted a profit of Rs3.5 billion in the second quarter of 2015-16, which is up 7% on a quarter-on-quarter basis.
According to a stock filing on Tuesday, PSO posted earnings per share of Rs12.8 for Oct-Dec as opposed to Rs12 in the preceding three-month period. The net profit of the petroleum giant for the second half of 2015 clocked up at Rs6.7 billion, which is up 57% on an annual basis. The result announcement came with an interim cash dividend of Rs5 per share.
The top line of PSO shrank 9% over the quarter to clock up at Rs168.7 billion in Oct-Dec. According to Arif Habib Limited, the quarter-on-quarter decrease was on the back of a decline in major product average prices. Prices of mogas, HSD and furnace oil came down by 1%, 2% and 13%, respectively, over the three-month period. “Furthermore, the top line was also dented by 3% quarter-on-quarter drop in total product volumes,” it said.
PSO’s operating expenses decreased 13% over the quarter to Rs2.9 billion while other income plummeted by 6% to Rs2.6 billion. The finance cost of PSO amounted to Rs1.7 billion after coming down by 9% in the quarter in the wake of a reduced interest rate scenario, Arif Habib Limited noted.
The increase in the company’s profitability was also supported by a lower effective tax rate: it remained 29% in Oct-Dec, significantly lower than 36% recorded in Jul-Sep.
“We attribute higher-than-expected gross margins (3.9%) to lower-than-projected inventory losses,” it added.
As many as 1.7 million shares of PSO were traded on the Pakistan Stock Exchange on Tuesday. In line with the overall bearish trend across the oil/gas exploration and marketing sectors, the PSO stock lost Rs5.43 or 1.6% during the day to end at Rs335.42 per share.
Published in The Express Tribune, February 17th, 2016.