PSO’s earnings slip 2.29% to Rs15.1 billion

Robust other income protects profit from steep fall

KARACHI: Pakistan State Oil’s (PSO) consolidated profit slightly dropped 2.29% to Rs15.11 billion in the year ended June 30, 2019 as a robust income from other sources, compared to the core business, strongly protected the earnings from a steep fall.

Other income increased 126% to Rs16.92 billion in financial year 2018-19 compared to Rs7.49 billion in the previous year, according to a notice sent to the Pakistan Stock Exchange (PSX) on Wednesday.

PSO posted such a high consolidated profit for the first time after raising its stake in Pakistan Refinery Limited (PRL). “The company booked a hefty other income in FY19 which we believe was a one-off adjustment related to PRL,” said Sherman Research analyst Aftab Awan in post-result comments.

He added that PSO’s volumetric sales recorded a significant drop. Furnace oil and high-speed diesel sales contracted 68% and 24% respectively. Motor spirit’s (petrol) volumetric sales remained flat during the year.

Taurus Research analyst Mustafa Mustansir said other income of PSO was boosted in line with a surge in interest income on bank deposits as well as a result of sales of petroleum products at comparatively higher margins.

“PSO built inventories of petroleum products through imports when oil prices were low in the world market, but as international oil prices surged, it allowed PSO to sell the products at comparatively higher margins in the domestic market,” he stated.

The numbers suggested that the growth in sales, which PSO reported to the PSX, came only in rupee terms instead of volumetric terms. The profit or loss account showed that sales surged 11.5% to Rs1.18 trillion in the year under review compared to Rs1.06 trillion in the previous year. Earnings per share came in at Rs36.55 in FY19 compared to Rs39.52 in the previous year.

The state-owned firm booked a consolidated profit of Rs15.46 billion last year. The PSO board of management recommended a final cash dividend of Rs5 per share and one bonus share in proportion of every five shares. The company has already paid interim dividend of Rs5 per share.

The new entitlement will be paid to the shareholders whose names appear in the register of members on October 18, 2019.

PSO’s share price inched down Rs0.26, or 0.17%, to Rs155.67 with trading in 6.96 million shares at the PSX. The profit or loss account showed the cost of products sold surged 12.5% to Rs1.15 trillion in FY19 compared to Rs1.02 trillion last year. 

Published in The Express Tribune, September 26^th, 2019.

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