PSO posts profit amidst grave financial challenges

Date: August 6, 2010

PSO posts profit amidst grave financial challenges

Pakistan State Oil delivered strong results for the financial year 2010 by achieving after tax earnings of Rs. 9.05 billion as compared to a loss after tax of Rs. 6.7 billion during financial year 2009. The announcement followed a Board of Management (BoM) review of the Company’s performance in a meeting held on August 6, 2010 at PSO House. The Board meeting was chaired by Mr. Nazim F. Haji.

 

During FY10, the Company’s sales revenue touched Rs. 877 billion as compared to Rs. 719 billion in the corresponding period last year. Despite financial challenges and economic slow down, PSO maintained its leadership in the White and Black Oil market segments with market shares of 55.3% and 88.2% respectively. Overall, the market share for PSO stood at 71 % during FY10. 

In light of the performance of the company, BOM declared a final dividend of Rs. 5 per share. Combined with the earlier interim dividend of Rs. 3 per share, the total dividend for the year stood at Rs. 8 per share translating into a total payout of Rs. 1.37 billion to the shareholders.

PSO sold 14.2 million tons of POL products as compared to 13.2 million tons during the preceding year. In Black Oil, PSO enhanced its market share appreciably from 85.8% in FY09 to 88.2% in FY10. PSO volumes grew by 17.8% in Furnace-Oil (FO) whereas the industry volumes enhanced by 14.6%. The surge was mainly due to increase in demand in power generation sector. PSO despite the mounting circular debt responsibly met the demands of the power sector of the country. The company registered positive volumetric growth of 20.9% in Mogas. However, in HSD, the Company experienced a negative volumetric growth of 9.7% due to economic slow down and circular debt.

The circular debt crisis continued to remain a serious problem as power sector customers continually defaulted on payments during the period under review. As on June 30, 2010, PSO’s receivables stood at an alarming figure of Rs. 117.5 billion. Consequently, PSO had to rely on heavy bank borrowings resulting in incurring of financial charges of Rs. 9.9 billion in FY10 as compared to Rs. 6.2 billion in FY09. As of today, the receivables pertaining to circular debt stand at Rs. 130 billion.

As the largest public sector organization in the energy sector, PSO is cognizant of its corporate responsibility and is actively involved in social activities and CSR initiatives that have a long term positive impact on the society. Over the years, the Company has stepped up to the challenges faced by the social sector and has proactively contributed in times of need. In the recent Attaabad lake crisis, PSO provided free medical supplies to landslide victims helping them cope with the physical and psychological trauma of the calamity. Replicating a similar spirit of citizenship, PSO has also donated a day’s salary of all its employees to the PM Flood Relief Fund.

The Board, with its newly appointed chairman, Nazim F. Haji, expressed confidence in the company’s future and in the leadership of Managing Director, Mr. Irfan Qureshi. Given the company’s strengths and the support of the Ministry of Petroleum and Natural Resources, the company will continue to overcome all the challenges imposed by the market dynamics and maintain its leadership position within the energy sector. PSO’s management vowed to continue making all out efforts in collaboration with GoP for recoveries from the power sector to ensure availability of products in the country and to reduce the impact of financial cost on the Company.