KARACHI, Oct 25: On Monday, Pakistan State Oil (PSO) announced financial figures for the first quarter of the financial to end on June 30, 2005. The company claims to be the largest company in Pakistan (on the basis of turnover) and a leader among the four Oil Marketing Companies (OMCs) with overall market share of 60 per cent in white oil and 75 per cent in black oil products.
For 1Q05, the company posted 21 per cent growth in profit after tax to Rs1,211 million, from Rs1,002 million in the corresponding quarter of the previous year.
Mohammad Sohail, head of research at InvestCap, observed that the numbers reflected improvement over the similar quarter last year, but those were slightly below market expectations. Much of the market was looking at a figure of around Rs7.50 earning per share (eps). The actual 1Q05 eps stood at Rs7.06. On ex-dividend basis, the price of the PSO stock shed Rs1.55 on Monday to close at Rs262, from the previous closing at Rs263.55. On the annualized earning per share (eps), which works out at Rs28.24, the price-to-earnings (p/e) ratio stands at 9.3x.
The board did not declare an interim dividend with the results on Monday, and none was expected. Historically, PSO announces interim dividends with the results for the second and third quarters and the final dividend with the annual accounts. In the last three years, the company has paid aggregate dividends at 130 per cent cash with 20 per cent bonus for 2002; 160 per cent cash for 2003 and 175 per cent cash for the previous year.
Alongside the results on Monday, PSO issued a press release stating that the Pakistan Credit Rating Agency (PACRA) had assigned a rating of "AAA" (Triple A) and a short-term rating of "A1+" (A One Plus) to the company. "These ratings denote the lowest expectation of credit risk emanating from an exceptionally strong capacity for timely payment of financial commitments," the company stated and added that those were the best ratings in PACRA's scale.
The ratings were said to be applicable to the senior unsecured creditors of the company. PSO observed that the ratings also recognized the restructuring efforts of the management that had engendered a sustainable improvement in overall operations, differentiating it from typical public sector entity and enabling it to better withstand competitive pressures. The company has benefited from upgradation of retail outlets as well as product diversity and innovation, PSO said.
Net sales in terms of value grew 40 per cent to Rs48.9 billion for the quarter under review, from Rs35 million in the similar period of the previous year. Gross profit increased by 32 per cent to Rs2.8 billion, from Rs2.1 billion and the operating profit rose by 35 per cent to Rs1.8 billion, from Rs1.3 billion. Analyst observed that the company had stood to benefit from three factors compared to the same period last year: One, the scaling oil prices, the gradual increase in demand of POL products and the abnormal rise in demand for furnace oil, the last on the back of shortfall in hydel power.
PSO stated in a statement explaining the 1Q05 figures that during the period under review, the domestic POL industry recorded an overall growth of 22 per cent, owing to the improvement in fuel oil consumption by 48 per cent. The white oil products increased by 13 per cent during the first quarter, whereas black oil consumption improved by 45 per cent, mainly due to improvement in fuel oil sales, mogas, HSD and Jet A-1 displayed a growth of 14; 14 and 17 per cent, respectively. The statement by PSO stated that in the intense prevailing competition, PSO progressively maintained its market leadership during the period under review, recording an impressive growth of 19 per cent in mogas and 14 per cent in HSD.
The domestic sales of Jet A-1 increased by 16 per cent. In the black oil, the company said, there was a revival in sales due to a dearth of hydel resources and the company sold 374,432 tons more, representing 58 per cent increase over the corresponding period last year.