- Economic downtrend and reduction in overall market size have impacted the company’s profitability
LAHORE: The Board of Management (BOM) of the Pakistan State Oil Company Limited (PSOCL), in its meeting held recently, reviewed the performance of the company for the first half of the financial year 2019 (1HFY19).
The challenging economic trend in the country fueled by rupee devaluation and adverse balance of payment position resulted in negative growth of 27pc in the cumulative liquid fuel market with a negative contribution of white oil and black oil of 12pc and 60pc respectively.
Black oil volumes have been impacted significantly due to power production shift towards RLNG in the country, based on a government decision.
Despite the challenging economic scenario, PSO led the liquid fuel market in 1HFY19 with an overall market share of 40.9pc (an increase of 0.7pc market share against Sept 18 quarter). In spite of soaring outstanding receivables (inclusive of LPS) from the power sector, Pakistan International Airlines (PIA) and Sui Northern Gas Pipeline (SNGPL) as of December 31, 2018, which stood at Rs325 billion (September 30, 2018: Rs310 billion), PSO maintained the sensitive supply chain by importing 48pc of total industry imports and uplifting 36pc of total refinery production in the country.
The economic downtrend and reduction in overall market size have impacted the company’s profitability. During the period under review, the company reported a profit after tax (PAT) of Rs4.2 billion. Major reasons for reduction in PAT as compared to the same period last year are lower gross profit mainly due to a dip in sales volume of black and white oil, higher inventory loss due to reduction in international oil prices, increase in finance cost due to sharp hike in discount rate by the central bank and higher average borrowing levels vs. same period last year, lower interest income from power sector and foreign exchange loss on account of PKR devaluation.
Despite stiff competition in the industry, especially due to an increase in the number of oil marketing companies and shrinking market size, PSO is making an all-out effort to maintain its market share and leadership position with sustained profitability. The management expressed sincere gratitude to all stakeholders including the government, especially the Ministry of Energy’s Petroleum Division and shareholders of the company for their continued support and guidance.