PSO - 9MFY24

Pakistan State Oil Company Limited (PSX: PSO) posted a weaker quarterly financial performance, but growth for an overall nine-month period. The OMC giant’s earnings for 3QFY24 were down by 59 percent year-on-year while the 9MFY24 earnings were up by 30 percent year-on-year.

The OMC’s performance, however, has improved on a quarter-on-quarter basis. The first quarter of FY24 was impressive with over Rs22 billion in profits, however, the losses of 2QFY24 of over Rs14 billion pulled the overall earnings of the company. PSO’s losses increased by more than four times during 2QFY24 on a year-on-year basis. And then in 3QFY24, PSOs sprung back to profit after tax – despite the year-on-year decline of 59 percent – to Rs5.6 billion.

PSO’s revenue growth stood at 6 percent year-on-year during 9MFY24, which was primarily due to higher prices of petroleum products amid falling volumetric growth. PSO’s sales volume of petroleum products fell by around seven percent year-on-year. In terms of the breakup of the three top fuels, the decline was led by furnace oil with a 79 percent year-on-year decline, followed by a 5 and 2 percent year-on-year decline in diesel and petrol volumes, respectively. Revenues for PSO during 3QFY24 were higher by four percent year-on-year due to higher prices of petrol and diesel along with higher volumetric sales of furnace oil. However, volumes of both petrol and diesel fell by over 2 and 4 percent year-on-year, respectively. The OMC during the 9-month period witnessed a growth in its retail market share of 1.3 percent which was driven by growth in the market share of the petrol segment by around 2 percent.

Higher cost of sales during 3QFY24 due to higher inventory cost resulted in a slide in the quarter’s gross margins. However, the company incurred overall inventory gains during 9MFY24 due to substantial and continued hikes in fuel prices, resulting in higher gross margins.

The company’s earnings in 9MFY24 were also supported by growth in other income whereas, the higher finance costs due to an increase in short-term borrowing and increasing receivables restricted the company’s profits during 9MFY24. For 3QFY24, a tax reversal during the quarter helped control the decline in earnings.