PSO Reports a Loss in FY20 Despite Increasing Market Share


Pakistan State Oil (PSO), the leading Oil Marketing Company (OMC) of the country, has announced its financial results for FY 20.

The company has reported a loss after Tax (LAT) of Rs. 6.5 billion as compared to a profit of Rs. 10.58 billion last year.

According to the company’s statement, the board noted that the unprecedented losses of Rs. 16.4 billion incurred during Q4 FY20 not only eroded the net profit of Rs. 3 billion earned during the first three quarters but also resulted in a net loss for the complete fiscal year 2020.

The COVID-19 pandemic, preceded by the Saudi-Russia oil price war brought unprecedented challenges and caused a massive global macroeconomic downturn. Providing customers with critical services and ensuring uninterrupted POL supplies throughout the country has been the company’s top priority.

Following the international oil price slump, POL prices were revised downward to pass on the benefit to the end consumer. However, due to significant downward inventory valuation, local OMCs and refineries suffered unprecedented losses.

As a majority of oil companies struggled to meet the demand, PSO fulfilled its duty and ensured uninterrupted fuel supplies throughout the country. During Q3 FY20 the daily average sales of PSO outlets surged by 122% despite the massive strain on the company’s supply chain.

The company’s net sales saw a slump of 4.35% to Rs. 1.10 trillion as compared to Rs. 1.15 trillion recorded in the same period last year. The cost of sales of the company was reported at Rs. 1.09 trillion as compared to Rs. 1.11 trillion. This took the gross profits to Rs. 12.22 billion, down by 66.06% as compared to Rs. 36.01 billion.

During May-June, the company imported 8 additional cargoes of High-Speed Diesel and 2 additional cargoes of Motor gasoline to avert a major fuel crisis in the country.

The finance cost of the company increased to Rs. 13.42 billion, up by 50% as compared to Rs. 8.98 billion last year. On the flip side, the other income saw an increase of 40% to Rs. 10.31 billion as compared to Rs. 7.35 billion. Distribution and marketing expenses also grew to Rs. 11.48 billion from Rs. 9.91 billion. The administrative expenses also increased to Rs. 3.14 billion as compared to Rs. 2.50 billion recorded last year.

The company reported a loss per share of Rs. 13.77 as compared to earnings per share of Rs. 22.55.

PSO Continues to lead Pakistan’s Petroleum Downstream Market

Despite the challenging economic scenario, PSO continued to lead Pakistan’s petroleum downstream market having a share of 44.3% in total liquid fuels at the end of FY20, which was 1.9% more than the prior year.

In the wake of uncontrollable circumstances and despite massive inventory losses, the company was able to contain the losses through efficient inventory management, focus on high margin products, and prudent expense controls.

During the last two months of FY20, PSO showed buoyancy and its ability to rise out of tough situations. The future outlook entails stability in international prices and inflationary revisions in marketing margins of regulated products are expected to improve gross earnings, said the company.

Moreover, macroeconomic stability, stabilization of PKR-USD parity, and aggressive business strategy of market penetration backed by plans of infrastructure development represent a promising future for the company.

PSO was also successful in reducing the receivables from the Power Sector, PIA, and SNGPL by Rs. 13.1 billion which stood at Rs. 185.2 billion as of June 30, 2020.

Taking the lead in complying with the GOP’s Clean and Green initiative in order to augment the sustainability of the energy market and to further Pakistan’s advancement in the sector, PSO has successfully upgraded the country’s fuel standards from Euro 2 to Euro 5. The company has also commissioned its first electric vehicle charging unit in Islamabad under the brand name “Electro”.

PSO’s share at the bourse closed at Rs. 190.69, down by Rs. 1.20 or 0.63%, with a turnover of 2.40 million shares on Tuesday.

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