Pakistan State Oil (PSO), the nation’s leading fuel supplier, has reported a robust 30 percent year-on-year increase in after-tax profits for the first nine months of the fiscal year 2023-24, signaling strong financial health amidst challenging economic conditions.
According to the financial results released for the period ending March 31, 2024, the profit after tax of Pakistan State Oil soared to Rs 13.40 billion, up from Rs 10.29 billion recorded during the same period last year.
This significant financial uplift was reflected in the earnings per share (EPS), which rose to Rs 28.54 for the period from July 2023 to March 2024, compared to Rs 21.91 in the corresponding period of the previous fiscal year. The board of management, which met on Friday, April 26, 2024, however, recommended no entitlements for shareholders at this time.
Arif Habib Limited, a prominent financial analysis firm, released a commentary on PSO’s third quarter results for fiscal year 2024, noting an unconsolidated profit of Rs 5.6 billion with an EPS of Rs 12.03 for the quarter, surpassing industry expectations. This positive performance was attributed to a lower than expected tax expense during the period.
Analysts highlight that the company experienced a tax reversal in the third quarter of FY24, compared to a 49% effective tax rate in the same quarter of the previous year and 13% in the second quarter of FY24. Detailed accounts are awaited to provide further clarity on the taxation adjustments that benefitted the quarter.
During the third quarter, PSO’s net sales increased by 4% year-on-year to Rs 843 billion, although they saw a quarter-on-quarter decrease of 7%. This fluctuation is primarily due to variations in fuel prices and a slight decline in volume sales, which dropped by 6% from the previous quarter and by 1% year-on-year.
Fuel prices saw dynamic shifts, with petrol prices averaging Rs 272.45 per liter in the third quarter, marking a 10% increase from the previous year but a 5% drop from the previous quarter. Diesel followed a similar trend, with prices averaging Rs 281.93 per liter, an 8% increase year-on-year and a 5% decrease quarter-on-quarter.
PSO’s operational expenses also reflected changes; distribution expenses rose by 12% year-on-year and 6% quarter-on-quarter to Rs 4.98 billion. Administrative expenses surged by 37% year-on-year, although they slightly decreased by 1% from the previous quarter, totaling Rs 1.41 billion.
One of the significant financial strains highlighted in the report was the increase in finance costs, which rose by 19% year-on-year to Rs 15.04 billion, remaining relatively flat from the previous quarter. This rise is largely due to increased short-term borrowing and growing receivables, primarily due to delayed payments from customers.
Despite these challenges, PSO’s substantial profit growth underscores its resilience and strategic handling of operational hurdles. As the fiscal year progresses, industry watchers and investors will likely keep a close eye on how PSO navigates the evolving economic landscape and its impact on the energy sector.
