Pakistan State Oil earnings up by 73 percent

PSOPakistan State Oil (PSO) announced profit after tax of PkR21.81 billion (EPS: PkR80.31) for financial year as compared to net profit of PKR12.6 billion (EPS: PKR46.2) for the last financial year, registering a remarkable increase of 73%YoY.

The result was accompanies by final dividend per share of PkR4.00 which along with interim dividend of PkR3.63 (bonus adjusted) takes full year payout to PkR7.63.

Contrary to recent history, the Company didn’t announce any stock dividend, which is believed to be due to the newly introduced taxation rules regarding issue of bonus shares.

For 4QFY14, PSO posted net profit of PkR2.42 billion (EPS: PkR8.90), down 33%QoQ against net earnings of PkR3.60 billion (EPS: PkR13.25) the Company posted in 3QFY14.

WPPF and WWF which the Company deducts in its annual accounts remained the prime dampener for 4QFY14. Key highlights of the result include: 1) topline growth at 8%YoY in FY14 owing to increased demand of FO, 2) increase in other income to PkR19.52 billion for FY14 mainly driven by penal income (from IPPs) and interest income (on PIBs) on account of better liquidity within the energy chain and partial settlement of circular debt in June 2013 and 3) a 26%YoY increase in finance cost to PkR9.54 billion during the period under review on account of re-emergence of circular debt.

Under the prevailing political impasse share price of PSO went as low as PkR357/share. However, it has gained almost 7% and is now trading at PkR381.5/share. Given risks to the reform program, including energy reforms as well as lack of triggers, analysts believe PSO is likely to continue underperforming the bourse.

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