Pakistan State Oil Company Limited (PSO) announced its financial result for FY23 posting a profit after tax (PAT) of PKR 5.7bn (EPS: PKR 12.06), down by 93% YoY. On a quarterly basis, the company booked a loss of PKR 4.6bn (LPS: PKR 9.85) in 4QFY23 against a net profit of PKR 21.4bn (EPS: PKR 45.70) in 4QFY22 amid inventory loss during the quarter tagged with higher finance cost. Alongside the result, the company announced a final cash dividend of PKR 7.50 in 4QFY23 (PKR 7.50 in FY23).

Result Highlights

· Net sales of the company arrived at PKR 3,391bn in FY23, up by 38% YoY given higher average selling prices of petroleum products. However, volumetric sales of MS, HSD, and FO declined by 17%, 25%, and 64% YoY, respectively. Meanwhile, the topline in 4QFY23 decreased by 3% YoY due to fall in overall volumes by 48% YoY (MS, HSD, and FO volumes plummeting by 22%, 39%, and 97% YoY, respectively).

· The company posted a gross profit of PKR 74.8bn with gross margin compressing to 2.21% in FY23 against 6.57% in SPLY amid inventory losses during the period. During 4QFY23, the gross margin settled at 1.90% (down by 568bps YoY) owing to inventory loss (~PKR 4bn or PKR 8.71/share) during the quarter.

· Other income went down by 46% YoY in FY23 to PKR 13.5bn compared to PKR 24.8bn in FY22. Whereas, in 4QFY23, the other income plummeted by 21% YoY arriving at PKR 1.9bn given lower interest received on delayed payments.

· The finance costs surged by 8.5x YoY to PKR 40.3bn in FY23 due to higher interest rates. Similarly, the finance cost swelled up by 7.4x YoY in 4QFY23 owed to the aforementioned reason and massive jump in short-term borrowings.

· The company booked taxation at PKR 2.1bn in 4QFY23 compared to PKR 32.9bn in SPLY.

Courtesy – AHL Research