PSO FY24: Robust earnings despite volume decline

Marked by significant improvements in profitability, Pakistan State Oil Company Limited (PSX: PSO) posted a strong financial and operational performance for FY24 despite some weakness in the previous quarter. The OMC giant’s earnings for FY24 witnessed a substantial increase of 180 percent year-on-year.

PSO’s revenue growth stood at 5 percent year-on-year during FY24, reaching Rs3.6 trillion. This growth in topline was primarily driven by higher average selling prices of petroleum products, supported by the increased prices of Motor Spirit (MS) and High-Speed Diesel (HSD), despite a 9 percent year-on-year decline in sales volumes. PSO’s HSD and MS sales were down by 8 percent and 1 percent year-on-year, respectively, in FY24, while FO sales decreased by 76 percent year-on-year. The company’s overall market share slightly declined from 50 percent in FY23 to 49.3 percent in FY24.

PSO’s gross profit for FY24 was nonetheless up by 30 percent year-on-year. However, the gross profit margin remained relatively low at 2.72 percent, reflecting the challenges posed by inventory losses due to fluctuations in fuel prices.

A significant boost in profitability came from a surge in other income, which increased by 74 percent year-on-year. This was largely due to interest accrued on delayed payments, particularly in 4QFY24, where other income jumped fivefold. However, PSO’s finance costs rose by 30 percent year-on-year due to higher short-term borrowings. The company’ is expected to maintain its profitability, in case of stabilization of circular debt issues and a more balanced RLNG business.