Karachi, August 23, 2023 (PPI-OT): PSO_FY23 result review - Higher Inventory losses and Finance costs mars earnings

Pakistan State Oil (PSO) announced result for 4QFY23 where company posted unconsolidated LAT of PkR4.62bn (LPS: PkR9.85), down 134%on a QoQ basis vs. PAT of 13.6bn (EPS: PkR29.07) during the quarter before.

The result came in slightly higher than our expectations of LAT of PkR5.85bn (LPS: PkR12.5), where-in major deviations occurred due to higher opex and finance costs during the quarter. Furthermore, inventory losses are estimated to have clocked in at ~PkR3.48bn (PkR7.4/sh), as ex-refinery prices for MS/HSD fell by 10%/16% during the period, subsequently resulting in gross margins for the quarter to end at 1.9% (vs. 5.7% in 3QFY23).

Topline of the company stood at PkR874bn, changing by +8%/-3% on a QoQ/YoY basis during the final quarter, as total POL offtakes for the quarter stood at 1.8mn tons (down by 1%/47% QoQ/YoY)

Earnings remained dampened during the quarter due to higher finance costs as well, clocking in at PkR15.2bn (up 6.5xYoY) during the quarter, as short term borrowings ballooned up to PkR410bn as per 3QFY23 accounts (+PkR244bn vs. June’22). The situation was worsened by the escalation of interest rates during the outgoing fiscal year, presently at multiyear high of 22%.

Earnings for the full year stood at PkR5.66bn (EPS: 12.06/sh), down 93%YoY vs. PkR86.2bn (EPS: 183.7/sh) during FY22. Along with the result, company declared a final dividend of PkR7.5/sh (down 25%YoY) compared to PkR10.0/sh paid out last year.