Pakistan State Oil (PSX: PSO) was among the leaders on the stock exchange yesterday as it hit the upper price limit with the announcement of a surprise earnings and dividend. The country’s largest energy company announced a final cash dividend of Rs15 per share in addition to an interim cash dividend of Rs10 per share. Also, the firm announced a bonus share issue of one-for-every-five share held (20 percent).

Improvement in core earnings are always ideal; PSO’s net revenues for FY17 surged by almost 30 percent year-on-year, and the growth came largely from improved volumetric sales by the OMC – particularly those of petrol and diesel, and hence PSO was able to take its market share up in FY17 from 55 percent to 56 percent in white oil. Its growth in top line also came from the RLNG business, which offsets the decrease in furnace oil volumetric growth.

With cost of goods sold up by 28 percent, PSO was able to keep gross margins also up in FY17. The increase in gross profit and gross margin could be due to inventory gains booked on account of lower fuel costs in the low oil price scenario. Higher operating costs and lower other income was offset by lower finance cost that came down by 17 percent year-on-year in FY17. PSO’s earning hence, saw an increase of 77 percent in FY17.

The OMC expects to increase its retail outlets further amid rising volumetric sales. It is also set to benefit from increase in RLNG business, whereas PSO’s liquidity position might see some short term respite as it has paid off its short-term borrowings with the receipt of Rs43.836 billion against the maturity of PIBs that it subscribed to under the partial circular debt resolution plan of the government.