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PSO expects drastic drop in earnings on low sales volume

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Zubair Yaqoob
The author has diversified experience in investigative journalism. He is Chief content editor at wnobserver.com

Pakistan State Oil Limited (PSO) is scheduled to announce its 3QFY19 result on 19th Apr’19. During 9MFY19, analysts estimate the company to report a PAT of PKR 5.67bn (EPS: PKR 14.48), down by 57% YoY compared to PKR 13.2bn (EPS: PKR 33.80).

This drastic drop in earnings is due to decline in sales volumes of FO and HSD by 73% YoY and 30% YoY along with significant inventory losses and higher finance costs.

On a sequential basis, earnings may clock-in at PKR 1,415mn (EPS: PKR 3.62), significantly down by 70% YoY compared to PKR 4,703mn (EPS: PKR 12.02).

This decline is attributable to massive decline in furnace oil sales by 26% YoY to 0.32mn tons compared to 0.44mn tons in SPLY, HSD sales decreased by 17% YoY owing to intense competition from other oil marketing companies and improvement in electricity generation resulting in lack of demand from captive power generation, increase in finance costs by 56% YoY to PKR 2,972mn on account of increase in borrowings to meet working capital requirements, and expected inventory loss of PKR 1.8bn during 3QFY19 due to change in ex-refinery prices.

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