Pakistan Petroleum Ltd. (PPL) announced a net profit after tax (NPAT) of PKR21.9 billion for the third quarter of FY25, translating to earnings per share (EPS) of PKR8.05, marking a decline of 21% year-on-year (YoY) and 20% quarter-on-quarter (QoQ).
The earnings drop was primarily attributed to lower hydrocarbon production and weaker oil prices. The result fell below expectations of PKR8.93 per share, with the deviation mainly due to higher-than-anticipated exploration expenses.
Cumulatively, the 9MFY25 NPAT stood at PKR71.9 billion (EPS: PKR26.41), down 26% YoY. The company also announced a cash dividend of PKR1.0 per share, falling short of the estimated PKR2.0 per share.
Net sales for the quarter stood at PKR64.5 billion, representing a 15% YoY decrease, and were broadly in line with expectations. The decline was largely driven by a 6% drop in international oil prices and lower production volumes, primarily due to pipeline constraints.
Oil and gas production are estimated to have declined by 5% and 15% YoY, respectively.
Exploration expenses declined by 7% QoQ to PKR5.0 billion but rose sharply by 44% YoY, significantly exceeding the estimated PKR1.6 billion. Detailed financials are awaited for further clarity. PPL reported other income of PKR4.3 billion, down 50% QoQ but up 9% YoY.
The sequential decline is primarily due to the absence of the one-off final settlement previously received from Midland Oil Company (MDOC) related to Block 8 in Iraq. The company reported an effective tax rate of 37% compared to expectations of 39%.
PPL reported subdued earnings for the quarter, primarily due to elevated exploration expenses. Despite a significant hike in gas tariffs since November 2023, the company’s recovery ratio declined to 76%, resulting in a 3% QoQ increase in trade receivables to PKR591 billion.
The dip in recovery is viewed as a temporary seasonal effect linked to winter, with improvement likely in 4QFY25. However, persistently lower production—driven by ongoing pipeline constraints—remains a key operational challenge.
PPL continues to trade at an attractive forward P/E of 4.8x, and the Buy stance on the stock is reiterated with a target price of PKR200 per share.
Sales for 3QFY25 stood at PKR64,486 million compared to PKR75,506 million in 3QFY24, a YoY decline of 15%, and a 5% increase QoQ. For 9MFY25, sales totaled PKR192,561 million compared to PKR226,524 million in 9MFY24, also a 15% decline YoY.
Operating expenses for 3QFY25 amounted to PKR13,581 million versus PKR13,240 million in the same period last year, reflecting a 3% YoY increase and a 9% QoQ increase. Royalties and other levies dropped to PKR10,167 million from PKR11,123 million, a 9% YoY decline and an 11% QoQ increase.
Gross profit came in at PKR40,738 million compared to PKR51,142 million last year, showing a 20% YoY decrease and a 3% QoQ increase. Gross margins remained steady at 63% for the quarter, down from 68% YoY.
Exploration expenses increased to PKR4,969 million from PKR3,458 million YoY, a 44% increase, but declined 7% QoQ. Administrative expenses rose 38% YoY to PKR1,640 million and slightly decreased 1% QoQ.
Finance costs increased 76% YoY to PKR672 million and 2% QoQ. Share of loss from associates stood at PKR50 million compared to a loss of PKR631 million in the same period last year. Other charges fell 47% YoY to PKR2,731 million and declined 3% QoQ.
Other income rose 9% YoY to PKR4,319 million but dropped 50% QoQ. Profit before tax (PBT) decreased 21% YoY to PKR34,995 million and 5% QoQ. Taxation amounted to PKR13,098 million, showing a 20% YoY decline and a 34% QoQ increase.
Profit after tax stood at PKR21,897 million, down from PKR27,837 million YoY and PKR71,851 million for 9MFY25 compared to PKR97,626 million for the same period last year.
EPS for 3QFY25 was PKR8.05, down from PKR10.23 YoY. EPS for 9MFY25 was PKR26.41, compared to PKR35.88 last year.
The company announced a dividend per share (DPS) of PKR1.00, unchanged from the previous year, with a cumulative DPS of PKR5.00 for 9MFY25.
Pakistan Petroleum Limited opened the trading session at Rs.160.25 on the day it announced its 3QFY25 financial results. At the time of posting the results, the stock was trading at Rs.159.00. By the close of the trading day, the share price settled at Rs.157.10, down by Rs.3.15 or 1.97%.
The stock traded within a day range of Rs.154.00 to Rs.161.50, with a volume of 5,810,849 shares. The stock’s 52-week range is between Rs.106.40 and Rs.216.50. The closing price of Rs.157.10 placed the stock at a P/E ratio (TTM) of 4.43, and its one-year change stands at +40.21%, while the year-to-date change is -22.82%.
