Pakistan State Oil (PSO) on Wednesday reported a 73% surge in profits, clocking in at Rs21.818 billion, during fiscal year 2013-14 over the previous year as the country’s largest petroleum supplier reaped benefits of the appreciation of the rupee and inflow of billions in overdue payments.
It announced a final cash dividend of Rs4 per share, which is equal to the amount disbursed among shareholders earlier this year.
“The main reasons attributed to high profit were the exchange gain and the money PSO received following settlement of circular debt,” said Shahid Ali, head of research at Summit Capital. “There was also some improvement in gross margins on petroleum sales. But most of the rise was due to a one-time gain.”
PSO, which has 3,689 outlets across the country, posted a rise of 230% in “other income” during fiscal 2013-14. It increased to Rs19.517 billion, compared with Rs5.9 billion recorded in fiscal 2012-13.
Exchange gain materialises as PSO books furnace oil for import and by the time it has to pay in dollars the rupee appreciates.
Net sales slightly improved to Rs1.187 trillion from previous year’s Rs1.1 trillion.
Vahaj Ahmed of Topline Securities said that sales grew 8% on the back of 8% to10% growth in furnace oil and petrol sales, while gross margin remained unchanged at 3.1%.
Much of the increase in other income was a result of Rs12.2bn the company received from IPPs under penal income on overdue receivables which was not cleared when the government partially resolved circular debt in June 2013, he said.
Moreover, company’s finance costs increased by 26% primarily due to the significant hike in short-term borrowings which reached Rs120.4 billion in March 2014 versus Rs17.3 billion by the end of June 2013.
“Once again, the company remained a major victim of circular debt which crossed Rs500 billion in FY14 despite a major resolution of the problem by the government.”
In fourth April-June 2014, PSO posted net earnings of Rs2.4 billion as against Rs3.3 billion, down 26% over the same quarter of the previous year.
Published in The Express Tribune, September 4th, 2014.
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