Lo and behold! PSO beats expectations

PSO

It is definitely celebration time for the largest OMC in the country.Pakistan State Oils financials for 9MFY12 reveal a surprising yet pleasing performance by the OMC amid choppy times.

The company was able to bag sales worth Rs737 billion for 9MFY12, inclining due to a strong growth in oil prices and petroleum products.The 32 percent rise in net revenues corresponds to the heightened prices of HSD and furnace oil and higher offtake of motor spirit during the relevant period.PSO beat the streets as it surpassed the earnings expectations.Net earnings clocked in at Rs8.97 billion versus Rs9.26 billion during the same period last year.

FY12 which started off as a year of gloom for PSO witnessed a refreshing third quarter that awed the market.With profitability withering by only three percent for 9MFY12 vis-à-vis 9MFY11, 3QFY12 experienced a growth in EPS of more than double.The 106 percent growth in the net earnings for 3QFY12 compared to the same period last came in from higher other income in shape of penalty recoveries and increase in interest income from power generation companies.

The finance cost of the company continued the downward trend during 9MFY12 falling by three percent versus 9MFY11 as PSO has been moving its local purchases to foreign suppliers.Moreover, the positive picture is also painted due to inventory gains and some respite in exchange losses brought by some stability in rupee depreciation.Another good news for the stakeholders came with the announcement of first interim cash dividend of rupees three per share.

However all hopes and optimism for the largest OMC keep getting dented the burgeoning circular debt.Where on one side its receivables including the power sector have mounted as high as Rs197 billion, its payables to refineries and international traders on the other hand, have also swelled up to Rs177 billion.PSOs receivables have been piling up, and the supply of the expensive furnace oil by the company to the power sector will come under colossal threat if its dues are not paid. – Brecorder

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Pakistan State Oil
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mn Rs                                9MFY12        9MFY11     YoY      3QFY12     3QFY11     YoY
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Net sales                          737,392        558,377    32%        244,516    198,423     23%
Gross profit                    25,600           21,698        18%        9,183         7,754          18%
Operating expenses    11,703           6,102           92%        3,889         1,925           102%
Other income                 7,402            2,536            192%     6,141          740              729%
Operating profits          21,885          18,490          18%       11,442        6,658          72%
Finance cost                   8,839            9,099             -3%        4,838         3,055           58%
Profit before tax           13,426         9,802             37%        6,730        3,750           79%
Taxation                          4,452            544                 719%      2,339         1,623            44%
Profit after tax               8,974           9,258              -3%         4,391         2,127             106%
EPS                                      52.32          53.98               -3%         25.60         12.40            106%
Gross  margin                 3.5%            3.9%                 3.8%      3.9%
Operating  margin        3.0%            3.3%                 4.7%      3.4%
Net margin                       1.2%            1.7%                  1.8%      1.1%
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