The Pakistan State Oil Company Limited (PSO) has posted a hefty surge of 1727.3% in profit after tax, clocking in at Rs21.88 billion at the end of the first quarter of the ongoing fiscal year 2023-24. The company registered a profit after tax of Rs 1.19 billion in the same period last year. At the end of the first quarter, the net sales expanded by 6.7% and gross profit by 769.77%. The net sales stood at Rs920.08 billion and the gross profit at Rs58.44 billion in 1QFY24, compared to Rs862.26 billion and Rs6.72 billion in 1QFY23, respectively. During the period under review, the company’s operating costs increased by 97.75% to Rs9.09 billion against Rs4.59 billion in 1QFY23. As a result, the operating profit climbed to Rs52.7 billion in 1QFY24, constituting a remarkable expansion of 514.3%. The unconsolidated profit before tax grew significantly by 969.56% to Rs42.86 billion in 1QFY24 from Rs4.007 billion in 1QFY23. On the tax front, the company bore a tax of Rs20.97 billion, which is 646.51% higher than Rs2.8 billion in the same period last year.

Thus, the impressive financial results of the company translated into the earnings per share of Rs46.62 in 1QFY24, compared to earnings per share of Rs2.55 in the same period the previous year. Liquidity Ratios Analysis Over the five years, the Pakistan State Oil Company Limited’s current ratio remained above 1.2, showcasing a stable liquidity position. The company reported the highest current ratio of 1.44 in 2021 and the lowest of 1.23 in 2023. The quick ratio remained volatile over the years. It had a stable quick ratio with a value above 1 over the year 2019-2021, which declined to the lowest of 0.76 in 2022 and 0.84 in 2023. This shows the company’s quick asset decline in recent years. The operating leverage measures the ability of a company to increase its operating income by raising its sales. PSO’s operating leverage followed a mixed trend over the years. It remained positive in 2020, 2021, and 2022, showcasing higher operating profit from increased sales. However, it remained negative in 2019, and 2023, indicating lower sales resulting in negative operating profit.

Profitability Ratios Analysis

PSO’s net sales followed an upward trajectory over the years, moving from Rs1.108 trillion in 2020 to Rs3.39 trillion in 2023. However, the company observed a loss after tax of Rs6.46 billion in 2020, but recovered to Rs29.13 billion in 2021 and Rs86.22 billion in 2022 before declining to Rs56.6 billion in 2023. The gross profit ratio moved up to the highest of 6.57 in 2022 over the four years, from 1.10 in 2020, whereas a gross profit ratio of 2.21 was registered in 2023. The company posted a net loss ratio of 0.58 in 2020, which recovered in later years, registering a net profit ratio. A similar trend was followed by earnings per share, with a loss per share of Rs13.77 in 2020 and earnings per share of Rs62.07, Rs183.66, and Rs12.06 in 2021, 2022, and 2023 respectively.

Future Outlook:

The company continues to strengthen the supply chain and infrastructure and for that, it is currently building 91 thousand tons of new storage points in Faqirabad, Faisalabad, and Mehmoodkot. The company has five digital integrated terminals which can improve operational efficiency and foster growth.

Credit: Independent News Pakistan (INP)