PSO profits decline amid heavy taxation

Tax jumps eight folds to Rs4.45 billion during July 2011 to March 2012.

KARACHI:

Pakistan State Oil (PSO) profits declined 3% to Rs8.97 billion in the first nine months of fiscal 2012 amid increase in tax rate.

The government’s cut in form of taxes increased eight times to Rs4.45 billion during July 2011 to March 2012 from last year’s Rs544 million, show company results released on Monday.

Against the odds, net sales of the country’s largest oil marketing company grew by 30% to Rs862 billion on a yearly basis led by higher product prices despite decline in volumes.

The increase in recurring profitability is on account of higher oil prices that culminated into higher absolute margins in non-regulated products, said Topline Securities analyst Nauman Khan. Support to the bottom-line also came from higher other income and curtailed financial cost. The company’s other income grew by a massive 132% to Rs7.4 billion with major income being booked in the third quarter.

Financial cost declined by 3% to Rs8.8 billion against Rs9.1 billion last year. Though still awaiting the detail accounts, we believe restricted financial expense is function of payment received in lieu of last TFC issued by the government.

The company also announced the first interim dividend of Rs3.00 per share interim for financial year 2012.

On a quarterly basis, PSO reported a massive earnings growth of 106% to Rs4.39 billion. The company managed to do much better than its peer Shell, the country’s second largest oil marketing company, who reported a loss of Rs224 million in January to March 2012.

Published in The Express Tribune, April 24^th, 2012.