After experiencing a significant downfall in earnings, Pakistan State Oil (PSO) is finally making a decent profit by recording quarterly earnings of PKR 4.14 billion in the month of March. Many analysts attribute the surge in company’s earnings to the increasing demand and reduced cost of sales.
The oil marketing company had been struggling to experience surge in its profits for quite some time. PSO, which currently has over 55% market share, had posted a net loss of PKR 2.13 billion during the similar time frame in the previous year. Also, the company posted earnings per share (EPS) of PKR 15.24 in the January-March quarter compared to loss per share of PKR 7.85 in the similar quarter of previous year. Looking at the figures mentioned above, it is noteworthy that the company has come a long way to prove that it still has the potential to make positive earnings.
The earnings report that PSO released recently eventually has a positive impact on its stock as the company’s shares currently stood at PKR 457, up from PKR 14.42 or 3.25% with a volume of 1.42 million shares traded at the Pakistan Stock Exchange (PSX). Adding to that, the oil marketing company has recorded net sales of PKR 218.16 billion during the quarter under review, which was 84% higher than PKR 134.61 billion in the corresponding quarter of previous year.
Moreover, PSO experiences a drop in the cost of sales to 95.76% (or PKR 208.92 billion) of net sales valuing PKR 218.16 billion from 100.45% (PKR 153.22 billion) of net sales of PKR 134.61 billion in FY16. The main reason that the company experienced a turnaround from loss to profit is because of the drop in the cost of sales. Further, increase in the demand of oil also contributed to higher sales and gross profit for the company. “White oil sales were up 5% year-on-year to 1.4 million tons in the third quarter (Jan-Mar) of FY17,” said Topline Securities’ analyst Umair Naseer.
It is important to note that during the last 9 months, PSO’s profit went up three times to PKR 14.15 billion (EPS PKR 52.10) from PKR 4.59 billion (EPS PKR 16.91) during the corresponding time period of FY16.