PSO posts highest half-yearly profit in its 34-year history

The Board of Management of Pakistan State Oil (PSO) convened on Wednesday at the PSO House to review the company’s performance over the first half of financial year 2010-11 (1HFY11).

Despite severe financial challenges posed by the ever increasing circular debt, PSO achieved record breaking results, and posted the highest half yearly profit in its history. Celebrating its 34^th year of existence PSO posted an after tax earnings of Rs. 7.13 billion in 1HFY11 in comparison to Rs. 5.08 billion in 1HFY10. The company’s sales revenue for the given period touched Rs. 427 billion as compared to Rs. 414 billion during the corresponding period last year.

In recognition of the remarkable performance of the company and its management under the guidance of MD, PSO, Mr. Irfan Qureshi, the BOM has declared a first interim cash dividend of Rs. 5 per share for the year ending June 30, 2011.

The country’s overall fuel consumption during the period under review has declined by 2.7% as compared to the corresponding period last year. This was primarily on account of the massive devastation as well as the temporary closure of a few power generation companies caused by the recent floods. In Black Oil, the industry declined by 3.2%, whereas the White Oil industry declined by 2.2%. However, PSO maintained its position as the market leader with the share in the Black Oil and White Oil segments standing at 79.2% and 55.0%, respectively, thereby contributing to an overall market share of 66.3%. 

Befitting its status as the largest public sector organization in the country, PSO donated approximately Rs. 50 million to various flood relief activities. This relief effort comprised of the distribution of food rations and necessities as well as the establishment of tent cities for the flood displaced citizens. At the same time PSO meticulously ensured uninterrupted fuel supply to meet the energy needs of the country by continuing operations of more than 90% of its retail network whilst simultaneously working towards reviving its affected infrastructure.

In the period under review PSO was also recognized for its community building initiatives in the form of the ‘Corporate Philanthropy Award’, by the Pakistan Center of Philanthropy (PCP) as being one of the top 5 public listed companies that donate to social causes. PSO was also recognized for its excellent performance at the 27th Corporate Excellence Awards organized by the Marketing Association of Pakistan (MAP) where the company was the recipient of the MAP ‘Corporate Excellence Certificate’ in the Oil and Gas sector.

The Board expressed confidence and appreciated the able leadership of the current MD, PSO Mr. Irfan Qureshi and showed satisfaction on the performance of the company. However, at the same time the Board Members also raised concerns on the ever-rising circular debt which as at December 31, 2010 stood at Rs. 127 billion. These receivables have now swelled to a massive PKR 150.84 billion which severely compromises the Company’s liquidity and renders it cash-strapped. Moreover, the financial costs associated with servicing this debt coupled with consistent non-payment from the power sector continue to hurt overall profitability of the company. PSO’s management is working closely with the Government of Pakistan and IPPs for recovery of its receivables and chalking out a long-term resolution plan for this continuing crisis.