The profit after tax of Pakistan State Oil Company (PSO) increased by 40 percent to the highest ever level of Rs 7.13 billion in the half-year period ended on December 31, 2010 as compared to Rs 5.083 billion earned in the corresponding period in 2009. The earning per share of the country's largest state-owned oil marketing company surged to Rs 41.58 in the period under review against Rs 29.64 in the same period a year back.
The Board of Management of the company convened on Wednesday here at the PSO House to review the company's performance over the first half of financial year 2010-11 (1HFY11). The board of management of the company recommended first interim cash dividend for the financial year ending June 30, 2011 at the rate of Rs 5 per share, equivalent to 50 percent.
According to the financial results sent to Karachi Stock Exchange (KSE), the company's gross sales increased to Rs 427.09 billion in the first half of FY11 as compared to Rs 413.935 billion in the same period in FY10. The company paid Rs 67.137 billion as sales tax and IFEM in this period against Rs 63.724 billion paid in the same accounts in the same period of last year. The company's cost of products sold increased to Rs 346.008 billion in the first half of FY11 as compared to Rs 336.691 billion in the same period in FY10.
The company's profit before taxation stood at Rs 6.051 billion in this period against Rs 7.882 billion earned in the same period a year back. The statement issued by PSO after the board meeting said that despite severe financial challenges posed by the ever-increasing circular debt, PSO achieved record breaking results, and posted the highest half yearly profit in its history. Celebrating its 34th year of existence, PSO posted after-tax earnings of Rs 7.13 billion in the first half of FY11 in comparison to Rs 5.08 billion in the first half of FY10. The company's sales revenue for the given period touched Rs 427 billion as compared to Rs 414 billion during the corresponding period last year.
In recognition of the remarkable performance of the company and its management under the guidance of MD Irfan Qureshi, the BoM declared first interim cash dividend of Rs 5 per share for the year ending June 30, 2011. The country's overall fuel consumption during the period under review declined by 2.7 percent as compared to the corresponding period of last year. This was primarily on account of the massive devastation and the temporary closure of a few power generation companies caused by the floods. In black oil, the industry declined by 3.2 percent, whereas the white oil industry declined by 2.2 percent. However, PSO maintained its position as the market leader with the share in both black oil and white oil segments standing at 79.2 percent and 55.0 percent, respectively, thereby contributing to an overall market share of 66.3 percent.
Befitting its status as the largest public sector organisation in the country, PSO donated approximately Rs 50 million to various flood relief activities. This relief effort comprised of the distribution of food rations and necessities as well as establishment of tent cities for the flood displaced citizens. At the same time, PSO meticulously ensured uninterrupted fuel supply to meet the energy needs of the country by continuing operations of more than 90 percent of its retail network whilst simultaneously working towards reviving its affected infrastructure.
In the period under review PSO was also recognised for its community building initiatives in the form of the 'Corporate Philanthropy Award' by the Pakistan Centre of Philanthropy (PCP) as being one of the top 5 public listed companies which donated to social causes. PSO was also recognised for its excellent performance at the 27th Corporate Excellence Awards, organised by the Marketing Association of Pakistan (MAP) where the company was the recipient of the MAP 'Corporate Excellence Certificate' in the oil and gas sector.
The Board expressed confidence and appreciated the able leadership of MD Irfan Qureshi and showed satisfaction on the performance of the company. However, at the same time, the board members also raised concerns on the ever-rising circular debt, which as at December 31, 2010 stood at Rs 127 billion. These receivables have now swelled to a massive Rs 150.84 billion which severely compromises the Company's liquidity and renders it cash-strapped. Moreover, the financial costs associated with servicing this debt coupled with consistent non-payment from the power sector continue to hurt overall profitability of the company. PSO's management is working closely with the government of Pakistan and IPPs for recovery of its receivables and chalking out a long-term resolution plan for this continuing crisis.