PSO's profit in six months up Rs 1.644 billion

KARACHI (January 24 2003) : Pakistan State Oil Limited profit in six months ended December 31, 2002 recorded a significant boost of Rs 1.644 billion compared with the same period corresponding year where it paid 60 percent as cash interim dividend.

The Board of Management of Pakistan State Oil met on Thursday to review the half-yearly accounts of the public sector entity. M. Salim, Chairman, BoM, was in the chair.

Tariq Kirmani, Managing Director, PSO, briefed the BoM members on the performance of the country's largest oil marketing company during the period July 1, 2002 to December 31, 2002.

The Board observed that during July-December general economic conditions of the country improved considerably despite prevailing global uncertainty and escalating Gulf crisis.

The domestic economy recovered from the aftermath of September 11 incident as indicated by increased foreign remittances and improved exports.

The investment climate also took a favourable turn owing to reduced interest rates and investor-friendly government policies.

A similar trend was reflected in the POL industry, which depicted 7.8 percent growth in white oil products (mogas, diesel, kerosene & jet A-1), while black oil (fuel & light diesel oil) declined by 3.7 percent thus registering an overall increase of 2.5 percent over the same period last year.

During the review period, PSO sales volume increased from 5.2 million tonnes to 5.4 million tonnes, up by 3.4 percent enabling the company to successfully increase its market share in key products.

ALL-TIME RECORD: During the first half of FY 2003, the BoM noted, the PSO sales revenue soared to Rs 101.3 billion, an all-time record since the inception of the company, thus registering an impressive growth of 17.5 percent over prior year period.

For the period ended December 31, 2002, the company earned an all-time record profit after tax of Rs 2.06 billion, while the profit before tax stood at Rs 2.9 billion.

Based on the unprecedented financial performance, the Board of Management announced a cash dividend of Rs 6 per share (60 percent) to its shareholders translating into a cash payout of Rs 1.029 billion, as against Rs 3.00 per share resulting into a cash payout of Rs 0.429 billion in the corresponding period last year.

The board also observed that the remarkable profitability of the company was augmented significantly as a result of the right steps taken by PSO management in the right direction in terms of improved productivity and increased efficiencies, aggressive marketing, business processes reengineering coupled with the full impact of enhanced margins.

Increased profit for six months is also attributed to the depressed earning during the same period last year owing to September 11 incident, which had not only affected the consumption adversely but also resulted in hefty inventory losses to OMCs.

REMARKABLE PERFORMANCE: The board commended remarkable performance of the company and expressed confidence that PSO would set newer landmarks in the following quarters and in years to come.

Zaheeruddin Khalid, head of research at First Capital Securities, said that the improvement in profitability is on account of full impact of margin revision initiated by the government, increasing domestic oil prices and improvement in POL consumption.

The core earnings of the company during the second quarter have improved as compared to first quarter on account of higher average POL prices, he said.

He expect PSO's earnings to face a slowdown during the second half of this fiscal year as the international oil prices are expected to come down once the Middle East situation eases off.

This would result in some inventory losses to the oil marketing companies.

However, the oil consumption would offset this as it would pick up owing to economic activity in the country.

The main beneficiary of this expected to be the high speed diesel segment because of higher demand from agriculture and transport sectors.

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