Pakistan Petroleum Limited (PSX: PPL) reported a 28.42% decline in net profit for the half-year ended December 31, 2024, as revenue shrank while expenses surged, including higher finance and administrative costs.
According to the company’s financial results, PPL posted a profit of Rs49.95 billion [EPS: Rs18.36], down from Rs69.79 billion [EPS: Rs25.65] in the same period last year.
Despite lower earnings, the Board of Directors declared an interim cash dividend of Rs2.00 per share (20%) on Ordinary Shares and Rs1.00 per share (10%) on Convertible Preference Shares for 2QFY25. This is in addition to the Rs2.00 per share interim dividend paid earlier in the fiscal year on both Ordinary and Convertible Preference Shares.
Revenue from contracts with customers fell by 15.19% YoY to Rs128.08 billion, compared to Rs151.02 billion in FY24, reflecting weaker sales performance.
At the same time, cost of sales declined marginally by 3.22% to Rs47.55 billion, but this was not enough to offset the revenue decline, resulting in a 20.96% drop in gross profit to Rs80.53 billion. Consequently, gross margins weakened significantly during the period.
Adding to cost pressures, administrative expenses surged 33.50% to Rs3.32 billion, while finance costs more than doubled, increasing by 113.13% to Rs1.23 billion, largely due to higher interest rates.
Despite the challenging revenue and cost environment, other income surged 97.70% to Rs15.18 billion, providing some relief to the company’s bottom line. However, this was outweighed by a 32.30% increase in other charges to Rs6.91 billion.
PPL’s profit before taxation fell by 24.40% to Rs74.87 billion, compared to Rs99.03 billion in same period last year. The decline was exacerbated by a 39% rise in taxation expenses to Rs24.92 billion, further reducing net profitability.
PPL, one of Pakistan’s leading exploration and production (E&P) firms, has been facing challenges from fluctuating gas demand, regulatory hurdles, and rising operational costs. The decline in revenue indicates potential volume pressures or lower price realisations, while higher administrative and finance costs reflect broader economic challenges, including elevated interest rates and inflationary pressures.
Despite these headwinds, the increase in other income suggests improved cash management or investment gains, partially offsetting the impact of weaker sales. However, with gross margins shrinking and taxation costs rising, the company’s profitability remains under pressure.
