KARACHI, Aug 22: The after-tax profit of Pakistan State Oil (PSO) has surged by 42 per cent to Rs3.2 billion in 2001-02 as compared to Rs2.25 billion in 2000-01.
Similarly, the company has earned an all-time record profit before tax of Rs5.1 billion in 2001-02, up by 49 per cent as compared with Rs3.45 billion in the previous fiscal.
The company said these impressive results have been achieved despite a revenue drop and a record provision of Rs2 billion made for taxes (an increase of Rs800 million).
In the wake of good result, the board of management of PSO on Thursday approved a final dividend comprising 80 per cent cash (Rs8 per share) and 20 per cent bonus shares for 2001-02. Combined with the earlier two interim cash dividends of Rs5 per share, the total amounts to Rs13 per share resulting in the highest-ever cash payout of Rs1.86 billion to shareholders of the company.
The announcement came, in the wake of impressive financial results as a result of unprecedented operating performance, at the conclusion of a PSO BoM meeting here at PSO House to review the company’s performance and accounts for the year ended June 30, 2002.
In addition, the company absorbed the balance financial impact of Rs408 million on account of Voluntary Separation Scheme (VSS) offered in April 2001. Even after excluding adjustments and inventory gains/losses, operating profit of the company grew by 32 per cent over the prior year. The profit increase is primarily due to innovative marketing strategies, organizational restructuring, product mix, revamping of internal systems with improved productivity along with the partial impact of enhanced margins during the last quarter.
Reduced offtakes of fuel oil by Hubco (around 0.9 million tons) primarily resulted in revenue drop of approximately Rs11 billion. Had Hubco’s consumption level remained at the preceding year’s level, the company would have not only reflected much higher growth in revenues but would also have maintained its market participation as fuel oil demand of this power utility was met by PSO being its sole supplier under a long-term fuel supply agreement.
The Board noted with appreciation that despite successive drop in international as well as domestic prices and consumption, specifically during first half of 2001-02, PSO’s gross revenues stood at Rs182.3 billion, down by 6.5 per cent over the prior period.
The 2001-02 experienced global economic recession triggered by September 11 incident in the United States followed by coalition military operation in Afghanistan. Pakistan’s proximity to Afghanistan and a war-like situation on its border with India put Pakistan’s economy under tremendous pressure. Consequently, consumption of all products in Pakistan, which grew at a CAGR of 7 per cent over last two decades, dropped by 4 per cent in 2001- 02. Consumption of fuel oil dropped by 6.3 per cent and that of kerosene oil and light diesel oil dropped by 19 per cent and 15.4 per cent respectively. Motor gasoline and high speed diesel registered consumption decline of 2 per cent and 0.3 per cent respectively.
Despite all the externalities and adverse factors, PSO sold 11.5 million tons of POL products. The company maintained its market share of Mogas at 40 per cent, while it snatched 1 percent share in lubricants and Jet A-1 from the competition. The company managed to contain the decline in HSD sales volume despite overall low agricultural demand as well as restricted supplies to agricultural areas adjacent to Indian border, which have been solely led by PSO. In addition, aggressive New Vision Development as well as Defence business won by competition for 2001-02, which is now regained by PSO, also contributed to HSD volume drop.
New Vision network expanded to 500 retail outlets at an average construction rate of 2.2 days per outlet. The company successfully equipped 600 retail outlets with internet facility while C-Store network was expanded to 56, whereas 44 CNG facilities were operational.
The latest launch of “PSO Loyalty Card” has been an innovative marketing initiative, enabling the customer to earn “PSO Loyalty Points” redeemable in three cities besides offering them attractive discounts for their non-petroleum product purchases at a large number of merchant outlets.