PSO declares record dividend

KARACHI: The Board of Management, Pakistan State Oil (PSO), on Thursday, August 3, 2006 declared a cash dividend of Rs. 18/- per share to its shareholders for the 4th quarter ended June 30, 2006. Combined with the earlier declared interim nine-month dividend of Rs 16/-, the total dividend comes to Rs 34/- per share for FY06.

The announcement came following the BoM review of the performance of the country’s largest oil marketing entity for the year ended June 30, 2006. Mr. Pervaiz Kausar, BoM Chairman, presided over the meeting at company head office PSO House.

The BoM observed that during the period July 1, 2005-June 30, 2006, the company sales revenue reached Rs 353 billion compared to Rs 254 billion in the previous year. Consequently, PSO recorded profit before tax of Rs. 11.7 billion, up by 27% over last year, and profit after tax of Rs 7.5 billion, up by 33% over the same period.

The earnings during the period were impacted by higher financial costs due to outstanding receivables from the government. However, better management of resources reduced the adverse impact on profitability and cash flow of the company.

Geopolitical and supply factors resulted in higher prices of petroleum products internationally causing a decline of consumption in all fuel categories. Diesel usage reduced by 4.6%, Motor Gasoline by 10.5%, while increased power generation demand positively impacted on Furnace Oil consumption by 11.4%.

New entrants in dynamically competitive petroleum sector significantly affected the market composition and posed challenges to the established OMCs. It is worth noting that despite the increasingly stiff competitive market situation, PSO again emerged as leader with 65% share on overall basis.

PSO improved its retail marketing position in gasoline and CNG with the introduction of value-added products and services. The company also added over 200 New Vision outlets to its retail network. The total number of New Vision Stations now exceeds 1,450.

Tapping of future potential in Cards and Non-Fuel Retail business, based on dedicated teamwork, ensured enhanced market share in Motor Gasoline from 44.7% to 45.3 and sustained market shares in other products. A number of marketing initiatives in collaboration with major brands were launched during this period.

To meet the ever-growing CNG demand, in addition to persistently increasing CNG facilities at PSO outlets, the company pioneered an innovative concept of Mother-Daughter CNG facilities at retail outlets on highways where piped gas is not available.

The BoM noted that the company achieved over 32% market share in Lubricants, despite the unfortunate fire incident in July-05 at Lube Manufacturing Terminal at Korangi and ever-increasing base oil prices. The insurance claim relating to this incident has been settled to the company’s satisfaction.

Company’s ERP initiative - SAP became fully operational on July 1, 2005 and all systems are largely streamlined on real-time basis and information is now available expeditiously to help business decision-making.

The year was marked by national and global recognition of PSO’s corporate transformation and strategic development. In addition to World Economic Forum membership, PSO obtained a lead role at World Business Council of Sustainable Development (WBCSD) Geneva, Switzerland, becoming the first company in Muslim world to have its CEO on Business Role Focus Areas Core Team (FACT) as well as obtaining the top-most advisory position at WBCSD for one of its General Manager.

Due to the importance PSO places on Corporate Social Responsibility, the company participated in various activities and provided support and assistance targeting health, education, social and national areas. In October 2005 earthquake relief operations, PSO refueled 2,800 foreign relief flights very efficiently and made arrangements at Muzaffarabad for providing fuel to relief helicopters. The company also contributed Rs. 30 million and employees donated their three-day salary to the President Relief Fund. PSO was the focal point for the LPG cylinders supply to the affected areas. PSO efforts in this regard were highly appreciated by all concerned.

In 2005-06, PSO sponsored various events including, Women’s EXPO, POGEE, Oil & Gas Power Energy Exhibition, etc. Sports were promoted at all levels, regional, national and international co-sponsoring the India-Pakistan cricket series, SAFF Football Championship and Lahore Marathon 2006. The company sponsored the first-ever PSO 1st Asian Junior Boxing Championship, Pakistan Open Golf Championship, etc.

PSO as a responsible corporate citizen partnered with various institutions involved in health sector like Marie Adelaide Leprosy Centre, the Kidney Center, Jinnah Post Graduate Medical Center, NICVD, Children Cancer Foundation, etc. In education, the company supported The Citizen Foundation, Ummed Foundation, LUMS, and several other national institutions.

The Board appreciated the company’s commitment to corporate social responsibility (CSR) and environment protection and hoped that it will continue to achieve higher standards in HSE to make the society healthier place to live in.

The BoM acknowledged the enormous efforts and contributions by the highly motivated and dedicated employees, dealers, cartage contractors, vendors and other stakeholders without which the impressive achievement of the company would not have been realized.

The Board of Management expressed confidence that with numerous marketing initiatives, the company will meet future challenges through differentiated products and services, enhanced utilization of technology, continued operational excellence and innovative value-addition.