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PSO profit jumped 77% to Rs18.2bn in 2016-17

KARACHI: Oil marketing company Pakistan State Oil (PSO) reported on Tuesday stellar growth of 77 per cent in net profit, which amounted to Rs18.2 billion for 2016-17.

Its board announced a cash dividend of Rs15 per share and stock dividend of 20pc in addition to the already distributed interim cash dividend of Rs10 per share. It took the aggregate payout for 2016-17 to Rs25 per share (cash dividend) and 20pc bonus shares.

On a dreary day at the stock market, investors welcomed the payout as the PSO stock hit its upper circuit with a gain of Rs21.62 to close at Rs454.06.

Analysts at Topline Securities commented that main contributors to earnings growth were strong sales, upward revision in the oil marketing sector margin on retail fuel products, absence of any major inventory losses (as was the case last year) and lower financial charges.

PSO said in a statement that outstanding receivables of Rs277.1bn from the power sector, Pakistan International Airlines and Sui Northern Gas Pipelines against supplies of furnace oil, aviation fuels and liquefied natural gas (LNG), respectively, continues to place enormous liquidity pressure on the organisation.

The company assured investors that it dealt with the situation through efficient treasury management that reduced the finance cost despite a huge rise in receivables.

PSO said it ensured uninterrupted nationwide furnace oil supply, peaking at 23,000 tonnes per day, and vowed that it will continue working closely with ministries and organisations concerned for the realisation of dues, including the late payment surcharge.

“The growth momentum in profitability came from 30pc increase in the top line to Rs878.1bn and gross margin improvement by 91 basis points,” the company said.

In 2016-17, the company showed healthy volumetric growth across its product portfolio. Volumes of furnace oil, jet fuel and motor gasoline were up by 11pc, 19pc and 9pc, respectively.

Focused strategy resulted in 106pc volume growth in the liquefied petroleum gas (LPG) business and the lubricant business repositioned itself by gaining 28pc volume over last year.

PSO imported 67pc of industry volume while improving refinery upliftment by 730 basis points to 37.8pc.

The biggest oil marketing company said it imported 186,672,980 million British thermal units (mmBtu) of LNG through 58 vessels and supplied 400 million cubic feet per day (mmcfd) of regasified-LNG from July 2016 to January, which subsequently increased to 600mmcfd from February.

“PSO continues to lead the liquid fuel market with an overall share of 54.8pc despite external challenges resulting in non-resolution of inland freight equalisation margin (IFEM) mismanagement and delay in the settlement of IFEM matters pending since 2008 by the regulator, storage and port constraint solutions pending with the government and last week sales capping monitored primarily on PSO by the Ministry of Petroleum and Natural Resources,” the company said.

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Azhar Hashmi

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