Having stayed abreast for the first nine months of FY12, Pakistan State Oil (PSO) finally succumbed to the fast declining international crude oil prices in the final quarter, as the OMC giants yearly profits went down by a massive 39 percent over the previous year. The market expected worse, which is why the companys share price at the local bourses was up by 3.5 percent by market close. The surprise bonus announcement of 20 percent also played its part in sending the share price higher. PSOs top line for the first time in its rich history crossed the trillion rupee mark, registering a healthy 25 percent year-on-year increase in revenues. There was not any significant change in volumetric sales, as the cumulative product sales dipped by 4 percent year-on-year to nearly 13 million tons. Non-payments on part of the IPPs played a significant role in furnace oil sales declining by 8 percent against the corresponding period last year. However, PSO, cashed in on the opportunity created by extended CNG load shedding, and increased the motor spirit (petrol) volumetric sales by 22 percent year-on-year. The inter-corporate circular debt continues to be the headache for PSO as the financial charges for the second year running remained over Rs11 billion. PSOs receivables stood at Rs176 billion as on March 31, 2012,compelling the company to arrange for heavy short-term financing to meet its liquidity requirements, hence higher financial charges. The payables too, remain worryingly high (Rs221 billion as on March 31,2012), offsetting the impact of penal income which the company charges on its defaulters. Although, the other income increased significantly over a last year, it proved to be immaterial as it was more than offset by the hefty inventory losses and exchange losses that the company faced in the fourth quarter. The benchmark crude oil prices went down 24 percent during the fourth quarter, which shook the bottom line significantly. The 9 percent currency depreciation against the greenback only added to the woes, as the two factors combined, to erode the reasonably strong core income performance. Going forward, PSO is expected to reverse the misfortunes of the final quarter as oil prices have already started to tick up and are expected to stay higher in the near future. The circular debt, though, has shown no signs of receding anytime soon; therefore, high financial charges will continue eating the bottom line.
================================================ Pakistan State Oil ================================================ (Rs mn) FY12 FY11 chg ================================================ Sales 1,024,424 820,530 25% Cost of sales 990,101 786,250 26% Gross profit 34,323 34,280 0% Gross margins 3.4% 4.2% -20% Other income 7,551 4,144 82% Finance cost 11,659 11,903 -2% Operating expenses 18,170 9,547 90% PAT 9,056 14,779 -39% EPS (Rs) 52.80 86.17 ================================================
Source: KSE notice
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