ISLAMABAD, Oct 29: Pakistan State Oil (PSO) on Monday declared a cash dividend of Rs5 per share for the first quarter (July-September) as its after-tax profit surged to Rs2.1 billion compared to Rs567 million in the same period last year.
This meant that after-tax earnings of the company in the first quarter increased by almost four times on the back of inventory gains arising out of record international oil prices and a new market in Balochistan that emerged after Iran’s crackdown on oil smugglers, almost wiping out cheap and low quality fuel.
The financial results of the country’s largest oil marketing company for the first quarter were approved at a meeting of the board of management here on Monday. PSO board chairman Pervaiz Kausar presided over the meeting.
The board expressed concern over rising receivables from the government due to subsidies provided to consumers that “had an adverse impact on company’s cash flows and profitability.”
It also expressed concern over government’s decision of revising formula for calculating margins of oil marketing companies and dealers on Mogas on Aug 25 that resulted in cut in margins by 24 per cent.
“This will affect company’s profitability adversely,” the company said.
A PSO announcement said the company’s sales revenue increased to Rs122 billion in the first quarter as compared to Rs101bn during the same period last year.
After-tax earnings for the quarter were Rs2.103 million as against Rs567 million in the comparative period.
The board observed that the quarter saw an all-time high crude prices, Opec basket averaged $71 per barrels compared to $65 during the same period last year.
The trend still continues and the crude price touched $81 per barrels in October 2007. This oil price increase had a positive impact on company’s results through inventory gains in contrast to the same period last year when the company suffered due to significant inventory losses.
The statement said the positive economic activity led to growth in POL industry. In liquid fuels, consumption grew by 9.2 per cent. Black Oil once again dominated the increase and recorded an almost double digit growth of 9.9 per cent, whereas white oil also showed growth of 8.6 per cent over last year. Part of this growth is a result of stoppage of smuggled products from Iran.
The meeting noted that the company grew faster than industry. In liquid fuel sales, volume increased by 15.2 per cent as compared to the previous year. In black oil, volume went up by 16.6 per cent, whereas in white oil the increase was 13.8 per cent, thus capturing market shares of 84.4 per cent and 61.2 per cent, respectively. Overall PSO market share of 71.7 per cent during the quarter is the highest-ever for seven years, the statement said.
The board noted that the PSO was also leading in providing CNG fuel facilities at its extensive retail network. Earnings from this fuel category were increasing and the future trend seemed promising. PSO card business (Fleet, Corporate and Prepaid) recorded a 28 per cent growth against the same period last year.
To further enhance its presence and image, the company has launched a new concept of ‘Green Stations’ to incorporate state-of-the-art technology at its outlet network to offer the customers a world class user-friendly retail environment while fuelling their vehicles.
During the period, PSO entered also into a fuel supply arrangement with Atlas Power Limited for its proposed 212 MW Independent Power Project (IPP).
Under the arrangement, PSO will meet furnace oil requirements of 212 MW Atlas Power plant located at Shaikhupura Road, Lahore.
The company said it would mitigate the impact of reduction in margins recently announced by the government through high sales volume, new businesses solicitation, network expansion, technological advancement and brand equity enhancement.
