Market expects PSO to suffer falloff in 1HFY19 earnings on account of lower sales

February 15, 2019 (MLN):

Pakistan State Oil Limited (PSO) is scheduled to deliberate its financial earnings for the period ended December 2018 on February 16, 2019 and will announce the results on Monday, February 18, 2018.

Based on the estimates projected by brokerage houses, the market expects PSO to have suffered a 65% decline in last quarter’s profits (Rs.1.2 billion, EPS: Rs.3.15) and a 36% decline in the cumulative net income (Rs.5.4 billion, EPS: Rs.13.8) for the first half of fiscal year 2019 (FY19).

However Shajar Capital is more optimistic about the gains as the brokerage house estimates a smaller decline in profitability in comparison to the rest.

Brokerage House

Earning in 2QFY19

EPS in 2QFY19

Earning in 1HFY19

EPS in 1HFY19

Arif Habib Limited

Rs.1.23 billion      (-65%, YoY)

Rs.3.15

Rs.5.4 billion (-36%, YoY)

Rs.13.84

IGI Securities

Rs.1.25 billion (-64%, YoY)

Rs.3.18

Rs.5.43 billion (-36%, YoY)

Rs.13.87

Shajar Capital

Rs.3 billion

Rs.7.81

Rs.7.2 billion (-15.1%)

Rs.18.5

The market attributes these falloffs to massive declines in sales of furnace oil by 75% and in sales of white oil (MS down by 14% and HSD down by 36%) in face of tough competition from other oil marketing companies and due to higher retail prices.

Moreover, “finance costs are expected to have risen one account of higher borrowings to meet the working capital requirements,” opined Mr. Arsalan Hanif, Analyst at Arif Habib Limited. He further adds to that an inventory loss of Rs.1.8 billion during 2QFY19 and significant exchange loss of Rs.1 billion.

In addition to Abdullah Farhan, Senior Research Analyst at IGI Securities accredits higher effective tax rates to the decline in profitability as well.

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Posted on: 2019-02-15T16:37:00+05:00

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