PSO Posts Rs. 7.8 Billion Profit in First Half of FY24

Pakistan State Oil Company Limited (PSO) announced its financial result for 1HFY24 posting a profit after tax (PAT) of Rs. 7.75 billion compared to a loss of Rs. 3.36 billion in the same period last year. On a quarterly basis, the company booked a loss of Rs. 14.13 billion in 2QFY24 against a loss of Rs. 4.55 billion in 2QFY23. According to Arif Habib Limited, this was due to higher inventory loss during the quarter coupled with higher finance costs. Net sales of the company arrived at Rs. 1.827 billion in 1HFY24, up by 7 percent YoY given higher average selling prices of petroleum products. However, the sales volume of petroleum products reduced by 17 percent YoY (MS, HSD, and FO down by 1 percent, 6 percent, and 86 percent YoY, respectively). Whereas, the topline in 2QFY24 climbed up by 8 percent YoY due to an uptick in overall volumes by 6 percent YoY on the back of 23 percent growth in HSD sales. Amidst soaring inflation, stagnant growth and geopolitical tension, the petroleum sector witnessed a downturn in product demand. PSO adeptly maneuvered through the obstacles and ensured uninterrupted nationwide fuel supply, stated PSO in a press release. PSO bolstered its market share in white oil with a notable 1.9% increase, reaching 52.6% by the end of the period. This growth was primarily attributed to an increase in gasoline sales, where the company augmented its market share by 3%, reaching 46.1% for 1HFY24. The company maintained the lions share in the diesel market with a share of 55.3%. Continuing to dominate the black oil market, PSO sold 153 KMT during the period despite a 57.4% decline in sales of the segment on YoY basis owing to low furnace oil-based power generation. The company further strengthened its infrastructure for enhanced capacity and reliability with the completion of 91 KMT of new storages at Faqirabad, Faisalabad, and Mehmoodkot, hence solidifying its position as the OMC with the largest storage capacity in the country, totaling 1232 KMT. The company also successfully rehabilitated 24 KMT of storage facilities at Sihala and Zulfiqarabad, complemented by ongoing efforts to enhance capacity by 23 KMT across terminals including ZOT, Habibabad, Sihala, and Mehmoodkot. The gross profit margin in 1HFY24 arrived at 3.2 percent vis-à-vis 0.68 percent in SPLY amid inventory gains during the period. During 2QFY24, the company posted a gross loss of Rs. 3.2 billion compared to a gross profit of Rs. 4.8 billion in 2QFY23 owed to inventory losses of -Rs. 24 billion during the quarter. Other income increased by 16 percent YoY in 1HFY24 to Rs. 11.1 billion in contrast to Rs. 9.6 billion in 1HFY23. Whereas, in 2QFY24, the other income swelled up by 2x YoY arriving at Rs. 7.8 billion given the higher interest received on delayed payments. The finance costs surged by 2x YoY to Rs. 25.3 billion in 1HFY24 given higher short-term borrowings. Similarly, the finance cost climbed up by 97 percent YoY in 2QFY24 owed to the aforementioned reason. The company booked a tax reversal of Rs. 2.2 billion in 2QFY24 compared to taxation of Rs. 4.6 billion in SPLY. PSO posted a loss per share of Rs. Rs. 30.12 for 2QFY24 and earnings per share of Rs. 16.51 for 1HFY24. Enhancing accessibility, PSO increased its retail presence by adding 21 new outlets, taking the total nationwide footprint to 3,547. Marking a significant leap forward in operational precision through digitalization, precise meter filling and invoicing system was effectively deployed for retail customers at Keamari Terminal A (Karachi). PSO takes pride in its prominent presence in the aviation sector, exemplified by the recent addition of Quetta airport to its portfolio. PSO also took charge of the Operations & Management responsibilities for Sukkur and Nawabshah Airports, further amplifying its jet fuel operations to encompass an impressive total of 14 airports nationwide. In light of the challenges posed by escalating trade receivables, heightened borrowing expenses, and mounting finance costs, PSO’s Board is diligently engaged in constructive dialogue with the relevant authorities to mitigate these concerns.