PSO swings to profit but sales fall

April 29, 2021 (MLN): Lower finance cost, as well as a reduction in the cost of sales, helped Pakistan State Oil (PSO) post a consolidated profit after tax of Rs 18.28 billion (EPS: Rs 38.92) during 9MFY21 compared to loss after tax of Rs 4.41 billion (LPS: Rs 2.19) in the corresponding period last year.

During 9MFY21, the top line witnessed a decline of 4.5% YoY to Rs 861 billion due to lower petroleum product prices which offset the impact of growth in overall volumes by 21% YoY, a report by Arif Habib highlighted.

The company posted a gross profit of Rs 39 billion with gross margins set at 4.6% during the said period compared to 1.68% in the prior year. In view of AHL research, a noteworthy change in ex-refinery prices resulted in inventory gains of Rs 7.0 billion in 3QFY21 compared to an inventory loss of Rs 4.5 billion in the same period last year.

On the cost front, during 9MFY21, the company observed a marginal increase in its major expense heads as distribution & administrative expenses up by 0.34% YoY while other expenses ballooned by 3x YoY to Rs 2.04 billion that somewhat dented the financial position of PSO.

However, finance costs plunged by 72% YoY to Rs 3.48 billion owing to lower reliance on borrowings and a decline in interest rates, supporting the bottom-line growth.

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