PPL - earnings galore in FY23

FY23 - it’s been a good year for the oil and gas exploration and production companies as the currency depreciation and price increase boosted profitability. Pakistan Petroleum Limited (PSX: PPL) recently announced its financial performance on the stock exchange and the company reported massive growth in its earnings for FY23.

The growth came from the top as revenues of the E&P firm were seen growing by 42 percent year-on-year in FY23. The rise in revenues came not only from higher prices, but PPL was able to make progress with volumetric sales as well. Where the oil sales remained stable, the gas sales picked up by 2 percent year-on-year during the year. Other factors that contributed to revenue growth were the rise in gas wellhead prices of Sui and the depreciation of PKR against USD.

Despite the rise in royalty expenses and operating costs, PPL’s gross profit was seen rising by round 46 percent year-on-year with 1.8 percentage point rise in gross margins for FY23. Another key contribution to the bottomline of the PPL was the contraction in exploration and prospecting expenditure – a major cost factor for the oil and gas E&P companies. The decline in exploration and prospecting expenditure was due to the lower cost of dry wells during the year.

Share of losses from associates also slid down while other income increased on the back of exchange gains witnessed during the year for PPL.

Growth in PPL’s earning grew by 83 percent year-on-year in FY23. It is expected that there will be a revision in gas prices, which would help the company in solidifying profitability further but also improve liquidity that has been affected due to accumulation of circular debt.