| Pakistan State Oil | |||
| Rs(mn) | 1QFY20 | 1QFY19 | YoY |
| Net sales | 329,783 | 280,719 | 17% |
| Cost of products sold | 319,076 | 269,812 | 18% |
| Gross profit | 10,706 | 10,906 | -2% |
| Other Income | 1,584 | 970 | 63% |
| Distribution & marketing | 2,565 | 2,068 | 24% |
| Administrative expense | 725 | 721 | 1% |
| Other expense | 289 | 792 | -63% |
| Profit from operations | 8,712 | 8,296 | 5% |
| Finance Cost | 2,640 | 1,826 | 45% |
| Share of Profit/(loss) of associates- | 145 | 120 | 21% |
| Profit after tax | 3,528 | 4,181 | -16% |
| Earnings per share (Rs) | 9.02 | 10.69 | -16% |
| Gross margin | 3.25% | 3.89% | |
| Operating margin | 2.64% | 2.96% | |
| Net margin | 1.07% | 1.49% | |
| Source: PSX | |||
Despite the growth in the OMC’s topline, the gross profits were flattish due to lower inventory gains. PSO’s earnings dropped by 16 percent year-on-year which came despite the 63 percent year-on-year growth in other income constituting mostly of penal income on late payment; and 63 percent lower other expenses amid exchange gains in 1QFY20 versus exchange losses in the previous quarters.
Distribution expenses and finance cost both weighed heavy on the OMC giant’s earnings. The growth in finance cost was surprising as it increased despite the fact that PSO received overdue payments from the power sector and the LNG sector.
Going forward, while the macroeconomic headwinds are expected to remain in place, PSO’s fortunes could take a leap with no hefty exchange losses in the offing, optimistic chances of the second tranche of circular debt clearance that would ease liquidity; and some OMC margin revision on the cards.