PSO’s big fat bottomline

Pakistan State Oil (PSX: PSO) has reported record earnings for FY21 in its recently announced financial results at the bourses. The oil marketing company has posted a rebound in profitability with over Rs29 billion in profits after tax for FY21, and it comes in contrast to a loss after tax of Rs6.5 billion for a stressful FY20.

What makes FY21 a memorable year for PSO? First, the OMC was able to reverse the trend of falling revenues with FY21 topline growing by 9 percent year-on-year. The growth in topline is a product of both volumetric and price ascend. PSO’s overall volumes as per the OCAC data increased by 24 percent year-on-year in FY21, with the three key products: petrol, diesel and furnace oil climbing by 19, 20, and 90 percent year-on-year.

According to the company, PSO has regained market share in FY21 with its volumetric growth as well as product diversification. Its liquid fuel volumes exhibited a growth of 22 percent resulting in a rise of market share for PSO from 44.3 percent in FY20 to 46.3 percent in FY21. The while oil segment touched the highest ever volumes despite the shrinking jet fuel industry where PSO’s market share rose again from 44 percent in FY20 to 45.2 percent in FY21. The recent all-time high petrol industry volumes are led by PSO where it set an all-time high record in MS with a growth of 21 percent year-on-year, and a rise in market share from 38.7 percent in FY20 to 41.3 percent in FY21. Its diesel (HSD) volumes also increased by 21 percent year-on- year with 140 basis points growth in market share to 47.2 percent. In percentage terms, the highest growth for volumes was seen in black oil (furnace oil) at 53 percent and a jump in market share from 46 percent to almost 52 percent in FY21.

PSO’s fat bottomline also benefitted from increase in other income that comes from growth in late payment surcharge income that it collects; no noticeable rise in administrative and distribution costs; and a decline in finance cost in FY21 due to weaker interest rates.

Much of the revival of volumetric sales can also be attributed to upgradation in fuel quality; PSO’s introduction of Euro 5 standard petrol, diesel and HOBC drove volumes. However, there have been other highlights to FY21 as well that makes the year memorable. The company commenced it first EV charging facility in Islamabad and focused on infrastructure as well as technological development where it increased storage capacity, retail presence, digital capabilities - the results of which the company believes has reflected in the company’s strong performance in FY21.