Pakistan State Oil profit may take a hit

Pakistan State Oil’s (PSO) earnings are likely to take a major hit on lower future volumes and slightly higher financial charges.

KASB Securities downgraded earnings estimate for PSO by 6 to 11 per cent on Tuesday.

The market is more focused on likely changes in turnover tax rules and progress on the corporate debt issue, according to KASB Securities.

Industry volume  estimates tweaked

Industry growth will drop two to four per cent based on expected weaker sales data during the first quarter of fiscal 2011, wrote KASB Securities analyst Mohammad Fawad Khan in a research report.

Seasonal drop in sales due to the Ramazan effect was anticipated but the worst floods in the country’s history have exacerbated seasonality effects, dragging down diesel sales by 34 per cent and power fuel by 22 per cent on a monthly basis.

Market share may recover ahead

PSO’s market share eroded from 71 to 68 per cent in August, provisional data showed.

The dramatic decline in market share is on the back of ongoing liquidity issues in the energy chain, closure of Pak Arab Refinery Company – a public sector company with 100,000 barrels per day capacity as the area surrounding the facility was inundated – from which PSO sources bulk of its mid-country supplies and shutdown of PSO’s oil depots in the mid-country, Khan added.

However, improved local supplies in the coming months should allow it to recover some lost ground, said Khan.

Published in The Express Tribune, September 8^th, 2010.