Pakistan: PSO third quarter profit up by 18 percent

PSOPakistan’s largest oil marketing company, Pakistan State Oil (PSO) has announced its third quarter (Jan-Mar 2014) result, posting profit after tax of Rs3.6 billion (EPS: Rs13.25) as against earnings of Rs3.06 billion (EPS: Rs11.27) for the same period last year, up by 18%YoY. The result was below market expectation that was mainly attributed to lower than expected exchange gains due to Pak Rupee appreciation.

Other Income, of the Company increased by 352% to Rs2.89 billion on account of interest income from Pakistan Investment Bonds (PIBs) during 3QFY14. There was 37%YoY increase in financial cost that could be attributed to higher working capital used during the quarter. The rising receivables of PSO from different IPPs and state owned power plants are creating a liquidity crunch for the Company and forcing it to utilize utmost working capital lines.

The 9MFY14performance of the company also remained very encouraging as evident by 107%YoY improvement in net profit to Rs19.4 billion leading to EPS of Rs71.41 as compared to Rs34.5 during the same period last year. A quantum jump in other income was the key reason behind earnings growth during the period under review. Furthermore, a 15%YoY growth in gross profit also contributed positively to the bottom-line of the Company.

As the summer season is approaching, the more electricity need will increase demand for furnace oil, while the irrigation needs will take HSD sales higher. PSO will be the major beneficiary of this demand uptick due to its expanded retail network.

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