Pakistan State Oil Posts Turnaround with PkR21.9bn PAT in 1QFY24

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Karachi, Pakistan State Oil (PSO) unveiled its financial results for the first quarter of fiscal year 2024, showing an impressive recovery. The company posted an unconsolidated Profit After Tax (PAT) of PkR21.9bn with Earnings Per Share (EPS) of PkR46.6. This performance stands in stark contrast to the Loss After Tax (LAT) of PkR4.6bn (Loss Per Share: PkR9.85) reported in the preceding quarter, according to a research report by AKD Securities Limited.

Surpassing AKD Securities’ projection of an EPS of PkR39.05, the key divergences were chiefly attributed to augmented gross profits, potentially resulting from elevated inventory gains, coupled with a reduction in finance costs. Specifically, inventory gains are believed to have reached approximately PkR37.3bn, which aligns with the rise in ex-refinery prices for Motor Spirit (MS) and High-Speed Diesel (HSD) by 3.1% and 5.7% quarter-over-quarter, respectively. This surge culminated in a gross margin for the quarter at 6.4%, a notable leap from the 1.9% in the fourth quarter of FY23.

Regarding the company’s revenue, PSO’s topline for the quarter stood at a formidable PkR920bn, marking an increase of 5% quarter-over-quarter and 7% year-over-year. The total Petroleum Oil Lubricants (POL) off-takes for the quarter also reflected growth, up 5% quarter-over-quarter to 1.9 million tons.

Turning attention to non-operating aspects, PSO’s finance costs were less than anticipated, totaling PkR10.28bn. This decrease can possibly be traced back to the retirement of peak short-term borrowings acquired in the previous quarter. In a broader perspective, there was a relaxation in working capital receipts in the prior quarter. This is, in part, attributed to improved cash inflows from the RLNG sector during 4QFY23, coupled with soaring profits stemming from escalating inventory gains. However, more detailed insights on this matter are awaited.

From a taxation viewpoint, effective tax rates for the period were marked at 49%, a significant shift from the -85% in 4QFY23 and 70% in 1QFY23. This upswing is presumably due to the application of tax losses carried over from the prior quarter.

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