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Pakistan State Oil (PSO) Records Impressive Earnings in FY24
The marketing and sales of imported liquefied natural gas (LNG) in Pakistan have turned into a highly profitable venture after the government passed on rising international gas prices to local consumers. This move has enabled state-owned energy companies to avoid further accumulation of circular debt, reduce their reliance on bank borrowing, and enhance their working capital.
Amid this favorable environment, Pakistan State Oil (PSO) surprised the market with strong quarterly earnings, posting a net profit of Rs15.86 billion for the full year ended June 30, 2024. This represents a remarkable 180% increase compared to Rs5.66 billion in FY23, translating into earnings per share (EPS) of Rs33.79, up from Rs12.06 the previous year.
Strong Fourth Quarter Performance
In the fourth quarter alone, PSO recorded a profit of Rs2.46 billion, compared to a loss of Rs5.69 billion in the same quarter last year. The company also booked Rs10.2 billion in other income, which Zayan Babar Khan, an analyst at Optimus Capital Management, attributed to the recognition of a late payment surcharge on LNG receivables.
According to Khan, the government’s decision to increase gas prices twice — in November 2023 and February 2024 — turned LNG into a profitable venture for PSO. “Looking ahead, we anticipate no further accumulation of circular debt, which should allow PSO’s loss-making RLNG business to support its cash-rich petroleum operations,” Khan added.
Reduced Finance Costs and Improved Liquidity
PSO’s cumulative finance costs also declined to Rs423 billion in the first three quarters of FY24, down from Rs467 billion in the first two quarters, reflecting improved liquidity and reduced borrowing. In the fourth quarter, PSO incurred a finance cost of Rs11.9 billion, a 21% decrease from the previous quarter and the same period last year.
The company’s Board of Management, during a meeting in Islamabad on August 27, 2024, reviewed the group’s financial results for FY24 and announced a dividend of Rs10 per share for the year.
Subsidiary Performance and Market Leadership
PSO’s subsidiary, Pakistan Refinery Limited (PRL), also performed well, recording a profit after tax of Rs4.1 billion on gross revenue of Rs403.6 billion. On a consolidated basis, the group reported a profit after tax of Rs18.3 billion, with an EPS of Rs39.
In the competitive white oil market, PSO increased its market share to 51.6%, strengthening its leadership position in the sector.
