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KARACHI, Aug 12: Pakistan State Oil (PSO) reported strong growth in earnings, quite in line with market expectations, but investors were slightly disappointed at the board’s announcement of the final cash dividend at Rs12.50 per share, which they thought fell short of the payout expectations from the oil-marketing company.
The price of the PSO stock, thus plunged by Rs16.50 to close at Rs337 on a volume of three million shares on Tuesday which appeared in sympathy with the overall KSE-100 index dip by 208 points to below the 10,000 level.
The company posted huge increase of 200 per cent in profit after tax for the year ended June 30, 2008, amounting to Rs14.05 billion, representing earning per share (eps) at Rs81.87, from Rs4.7 billion (eps at Rs27.3) the previous year.
Analyst Naveed Vakil at the AKD Securities observed that the strong growth in earnings was possibly on the back of windfall inventory gains recorded throughout the year where ex-refinery prices were up 53pc-128pc year-on-year. Net revenue of the company during FY08 increased by 42 per cent to Rs495bn from Rs350bn in FY07. Gross margin improved to 6.0pc from 3.5pc the earlier year.
Analysts said that the extraordinary growth in earnings was attributed mainly to “rise in both white and black oil rupee margins.”
Moreover, rise in international oil product prices led to inventory gains which boosted the bottom-line of the company.
Farhan Mahmood, analyst at the JS Capital, observed that stand alone in 4QFY08, the company posted robust earnings of Rs5.6bn (eps Rs32.6) compared to profit of Rs2.5bn (eps Rs14.8) during 4QFY07, a growth of 120pc YoY.
Including the final cash dividend of Rs12.5, the cumulative payout from PSO stood at Rs23.50 for the full year.
SHELL PAKISTAN: The company posted after tax profit of Rs5.137 billion, recording a giant leap in earnings from Rs707 million in the previous financial year. EPS rose to Rs93.76, from Rs12.90. The board announced final cash dividend at Rs40 per share, which was in addition to Rs10 per share interim already paid. A bonus issue at 25 per cent was also declared.
Net revenue rose to Rs139.8 billion for FY’08, from Rs 115.0 billion the previous year.
The company said in a statement released at the stock exchanges that the “unprecedented profitability” was mainly driven by increasing international oil prices.
“However, the current volatility in international oil prices will have a significant impact on the company’s future profitability,” the company cautioned.
Shell Pakistan also observed: “The industry went through its most challenging period during the FY’08 , facing its worst-ever cash flow crisis due to the extraordinary increase in government receivables on account of Price Differential Claims (PDC).”
The price of the share in Shell rose by Rs18.30 ex-dividend on Tuesday to Rs384 with a turnover of only 5900 shares.
Javed Omer Vohra & Company: The stock brokerage firm took the full brunt of the blow of the meltdown of the Pakistani equity market during the on-going year.
Analysts admitted that the results posted by the company could not have been worst, as a staggering loss of Rs868 million for the financial year June 30, 2008, replaced the after tax profit amounting to Rs 1 billion earned by the company the earlier year. EPS of Rs23.55 for FY07, converted to loss per share at Rs18.79 for the year under review. The board nonetheless, tried to put up a bold face by announcing a stock dividend at 10 per cent for the shareholders, which enabled the share in the company to gain Rs1.36 and close at Rs28.56 with a volume of two million shares.
The extraordinary dismal financial results for the latest year were attributable to a sharp drop in “capital gains on sale of investments” to Rs 75 million for the FY08, from Rs 211 million the earlier year.
Financial charges showed significant increase to Rs171 million, from Rs44 million last year. But the company took the biggest hit from “re-measurement of investment to fair value,” where a whopping loss of Rs811 million was seen to have replaced almost an equally huge gain of Rs763 million the previous year.
Investors would be interested to dig deeper into the portfolio of the stock brokerage firm to see if large quantity of a couple of stocks had caused the loss or a general slump in a wide range of equity values on the company’s books.
