Corporate results: Tax relief boosts PSO profits

PSO posted an increase of 63 per cent in profit to Rs14.8 billion in fiscal 2011


Faseeh Mangi August 10, 2011

KARACHI:


Pakistan State Oil, the country’s largest oil marketing company, managed to beat market expectations by posting an increase of 63 per cent in profit to Rs14.8 billion in fiscal 2011.


The growth is largely driven by a 64% fall in tax rate on a yearly basis due to a reversal of the turnover tax, according to BMA Capital Muhammad Ali Taufiq. The finance ministry had reversed the turnover tax rate to 0.5 per cent after the government had increased the rate from 0.5 per cent to 1 per cent in the fiscal budget 2011.

The company’s tax cut plummeted to Rs3.2 billion during the outgoing financial year against whopping Rs8.9 billion paid in the preceding year, according to a notice sent to the Karachi Stock Exchange.

The company beat market expectation as analyst, on average, estimated the net profit to stand around Rs12 billion, missing the actual number by 23 per cent.

The board of directors in a meeting on Tuesday also declared a final cash dividend of Rs2 per share, taking the full year payout to Rs10 per share, according to a notice sent to the Karachi Stock Exchange.

Net sales of the company grew 10.5 per cent despite volumes sold fell nine per cent. Price increase of the petroleum products went up 18 per cent on a yearly basis and saved the day for the oil marketing company.

Shortage of compressed natural gas resulted in a 27% improvement in petrol sales during the financial year.

Finance cost rose 20.5 per cent to Rs11.9 billion on account of rising receivables. The board expressed serious concern on the spiralling receivables which stood at Rs138.2 billion as of August 9, 2011.

During April to June 2011, PSO received Rs90 billion on May 3 and an additional Rs11 billion on May 24, 2011, of which a total of Rs80 billion was disbursed to refineries and the government, while the remaining was deployed to reduce short term borrowings, according to BMA Capital.

Moreover, the company dropped its market share due to drop in sales but still maintained its position as the market leader with a market share of 65.6%.

PPL profits rise, but lower than expectation

Pakistan Petroleum Limited, the country’s second largest oil and gas explorer, surprised the market on Tuesday by announcing lower than expected net profit for the financial year 2011.

The explorer’s net profit rose 35 per cent to Rs31.45 billion in the outgoing fiscal year compared with the preceding year’s Rs23.32 billion, according to a notice sent to the Karachi Stock Exchange.

Consensus of six analysts reveals that the market expected net profit to stand around Rs32.75 billion, falling four per cent short of the target.

The improvement in the profitability is mainly on account of a 26 per cent rise in the well head gas prices coupled with a 24.7 per cent jump in crude oil prices  on a yearly basis, according to analysts.

The company announced a final cash dividend of Rs2 per share, taking the full year payout to Rs12 per share. Moreover, the board of directors also approved a bonus share in proportion of one share for every ten shares.

On the other hand, field expenditures grew by 17 per cent to Rs21.3 billion on the back of increased exploration.

Unilever profits firm

Unilever Pakistan, the country’s largest consumer goods manufacturer, profits rose 37.5 per cent to Rs1.63 billion in the first half of the year against Rs1.19 billion posted in the same period last year.

Sales rose to 15.3 per cent to Rs24.8 billion during January to June 2011 from last year’s Rs21.5 billion. The board of directors in a meeting on Tuesday also announced to pay a cash dividend of Rs105 per ordinary share of Rs50, according to a notice sent to the Karachi Stock Exchange.

The company’s spreads, home and personal care along with ice cream business performance rose while the beverages sector fell.

The company stock price performed against the market trend and gained Rs62.07 to close at Rs6,004.42 during trade at the Karachi Stock Exchange on Tuesday.

Published in The Express Tribune, August 10th, 2011.

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