Financials

Analysis

In FY24, Company has reported profit after tax of Rs. 15.9 bn. primarily on account of following elements:

• The Company achieved a 5.6% increase in gross sales, reaching Rs. 3.8 trillion in FY24 compared to Rs. 3.6 trillion in FY23. This rise is mainly related to price variance.

• Gross profit increased significantly by 30%, from Rs. 74.8 bn. in FY23 to Rs. 97.3 bn. in FY24. This increase is primarily attributable to enhanced margins in white oil segment

• The Company reported a remarkable growth in other income, which rose to Rs. 25.2 bn. in FY24 from Rs. 12.6 bn. in FY23. This substantial increase was mainly driven by the recovery of financing costs associated with the white oil pipeline and higher income from deposit accounts, reflecting efficient financial management.

• The operating profit increased by 40.5%, reaching Rs. 92.1 bn. in FY24 compared to Rs. 65.6 bn. in the previous year. This growth is a result of increase in gross margin, other income and Company's successful control over operating expenses relative to revenue growth.

• The significant increase in finance costs during the current financial year is due to higher average borrowings in FY24 to finance receivables tied up in circular debt.

• Gross Sales

  Gross sales was highest in first quarter due to higher sales volumes and prices.

• Gross Profit

  Gross profit was highest is the first quarter due to higher sales volumes and favorable pricing regime.

• Other income

  Other income was higher in second and last quarter due to recovery of financial charges pertaining to line fill cost.

• Finance Cost

  Finance cost was higher in second and third quarter due to increase in average borrowings consequent to higher average receivables from SNGPL in these quarters.

• Profit After Tax

  Profit after tax was highest in first quarter mainly due to higher gross profit and lower finance cost.

• Analysis

  The cash flow statement over the past six years reveals fluctuations in the Company’s cash flows as follows:

• Operating Activities

  The Company's operating cash flows were quite healthy in FY24 as compared to prior years .This aligns with the balance sheet's shift in trade debts and receivables, which were quite high in prior years and have reduced this year.

• Investing Activities

  Negative cash flows from investing activities reflects ongoing investments in assets and strategic diversification initiatives being pursued by the Company. These investments underline the Company’s commitment to expanding its operational base and enhancing long-term growth prospects.

• Financing Activities

  Cash flow from financing activities was negative in FY24 as Company's consistent pursuit for recovery resulted in reduction in receivables. This reduction provided some financial space to the Company for debt repayments.

Analysis

As of June 30, 2024, variation as compared to June 30, 2023 is as follows:

• The interest cover ratio improved in FY24 owing to stronger profitability in the current year.

• The increase in net assets per share demonstrates a positive growth in shareholder equity. This rise is due to retained earnings and enhances financial stability and shareholders' value.

• The decrease in the financial leverage ratio is due to repayment of debt during the year which also reduces financial risk for the Company.

• The reduction in the weighted average cost of debt reflects more favourable borrowing terms and a shift towards less expensive debt in FY24

Analysis

As of June 30, 2024, variation as compared to June 30, 2023 is as follows:

• In FY24, the cash to current liabilities ratio fell due to decrease in cash and cash equivalents at year end on account of repayment of short-term borrowings.

• The positive cash flow from operating activities in 2024 is due to reduction in trade receivables and inventory levels.

• The cash flow from operations to sales ratio as well as cash flow to capital expenditure improved due to increase in cash flow from operating activities.

• The cash flow coverage ratio improved, indicating better coverage of cash obligations primarily due to a positive shift in the operating cashflows as compared to last year. The current ratio and the quick ratio remained stable reflecting availability of adequate liquidity to the Company.

• The positive Free Cash Flows to the Company showcases a strong financial performance, where the Company generated sufficient cash from its operations to cover its capital expenditures and investments.

• The reduction in Free Cash Flow to Equity holders is primarily attributable to debt repayments and increased interest expenses.

Analysis

As of June 30, 2024, variation as compared to June 30, 2023 is as follows:

• Earnings per Share (EPS) & Market Value per Share

  EPS surged to Rs. 33.79 in FY24 from Rs. 12.06, signalling robust profitability and operational success. This positive performance boosted the market value per share to Rs. 166.21, reflecting increased investor’s confidence.

• Price-to-Earnings (P/E) & Price-to-Book Ratios

  A lower P/E ratio of 4.92 in FY24, down from 9.20, highlights the Company's attractive valuation, with strong earnings potential. The low Price-to-Book ratio of 0.08 suggests that the stock is undervalued.

• Dividend Analysis

  With an increased dividend per share of Rs. 10.00 and a stronger dividend cover ratio of 3.38, PSO demonstrates a solid balance between rewarding shareholders and reinvesting for future growth, underscoring its commitment to long-term value creation.

Analysis

As of June 30, 2024, variation as compared to June 30, 2023 is as follows:

• PSO’s improved inventory turnover ratio in FY24 and reduced number of days in inventory are due to its ability to optimize stock levels, respond to market demands effectively, enhancing liquidity and reducing holding costs.

• The slight reduction in debtor turnover ratio in FY24 is mainly due to the increase in average debtors owing to an increase in receivables balance from SNGPL. Receivables from SNGPL, however, started decreasing towards the end of the year.

• The reduction in the creditor turnover ratio, alongside the increase in the number of days in creditors resulted in optimization of cash flows and thus liquidity of the Company.

• The reduction in the operating cycle from 52 days in FY23 to 46 days in FY24 is a positive indicator of improved operational efficiency. By shortening the time taken to convert inventory and receivables into cash, PSO has strengthened its liquidity position, which is crucial given the substantial short-term borrowings (Rs. 403.6 bn. in FY24) and the liquidity crunch it faces due to the circular debt. The ability to cycle cash faster allows PSO to better manage its significant current liabilities and maintain operational stability.

• The asset turnover ratio improved slightly, indicating that the Company generated more sales per unit of assets. The marginal increase indicates that PSO is utilizing its assets more effectively to generate revenue, a positive sign for ongoing operational efficiency.

Analysis

As of June 30, 2024, variation as compared to June 30, 2023 is as follows:

• Production per employee has remained stable.

• Revenue per employee has increased significantly. This increase is a combination of operational efficiency as well as increase in market prices of petroleum products.

Analysis

As of June 30, 2024, variation as compared to June 30, 2023 is as follows:

• Plant availability ratio has remained stable.

• Customer satisfaction index is monitored based on customer responses.

Analysis

As of June 30, 2024, variation as compared to June 30, 2023 is as follows:

• Spare Inventory to asset cost has remained stable.

• Maintenance cost to operating expenses has increased this year on account of various budgeted maintenance activities undertaken this year.