Corporate results: PSO’s loss amounts to Rs1.04 billion

Company had recorded profit of Rs3.6b in comparative period previous year.

KARACHI: Marred by inventory losses, Pakistan State Oil (PSO) on Monday announced a net loss of Rs1.04 billion for the January-March quarter, a drastic retreat from a profit of Rs3.6 billion recorded in same period of last year. 

The nine-month profit for fiscal 2014-15 plunged 83% to Rs3.2 billion as OPEC’s basket crude oil price slipped 51% to $53 per barrel in March 2015 from $109 in July 2014, the company said.

In a rare event, PSO’s results have been approved by CEO since the government is yet to reconstitute the board of directors, which was dissolved earlier this year.

CEO Shahid Islam also approved cash dividend of Rs6 per share.

PSO said the profit was also hit because of a lower recovery in late payments surcharge. In the nine-month period, it collected Rs3.4 billion against Rs11.9 billion received in the same period previous year.

The inventory loss during the period was Rs8.3 billion.

In the third quarter to March 2015, gross profit was down 74.6% to Rs1.6 billion as PSO remained under government pressure to keep its massive network of over 3,600 petrol pumps while price was on a continuous decline.

Inventory loss occurs when the value of petroleum products stored by a marketing company drops in line with international benchmark prices.

PSO also saw a substantial jump of 68% to Rs3.11 billion in its operating cost, further eroding the bottom line. These operating costs are related to marketing and other expenses.

Finance cost also jumped 28% to Rs2.7 billion.

Pakistan’s largest marketing company said crude oil price has started to go up again subsequent to third quarter and “it expects that inventory gains will reverse earlier such losses thereby contributing positively to PSO’s profitability.

During the third quarter, PSO’s market share for petrol was 48%, 49.4% for diesel and 63.1% in furnace oil segment, less than last year’s 68.1%.

The statement also referred to LNG import project, saying that PSO is currently in negotiations for entering into a medium or long term Sales Purchase Agreement with Qatargas.

Published in The Express Tribune, April 28^th,  2015.

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