PSO gains 67.4 percent market share; retains leadership

KARACHI: The Board of Management of Pakistan State Oil reviewed the performance and accounts of the company for the first half of year 2006-07 on February 22, 2007.
The Board observed that during the review period of July 1 to December 31, 2006, the industry off-takes of Black Oil were 3,515 K Tons vs 1,998 KTs sales in the corresponding period last year, i.e. an increase of 76%. The off-takes of White Oil, however, were lower by 2%, i.e. 4,637 K Tons vs 4,725 K Tons last year. The overall off-take of all fuel products was 20% higher than last year.

PSO’s sale of Black Oil was 3,474 K Tons, which was 76.4% higher than 1,969 KTs in the previous year. In White Oils, although the industry sales declined, PSO successfully marketed 2,743 KTs vs 2,710 KTs last year. As such PSO improved its market share in Motor Gasoline from 45.2% to 46.3%, in High Speed Diesel from 57.5% to 60.5%, and in Kerosene Oil from 59% to 71.5%. PSO’s market share in fuels increased from 65% to 67.4%.

The profitability of oil marketing companies in the first half of the year was adversely affected by a number of factors, i.e. inventory losses due to almost 20% lower prices of oil in the international market; lower margins regime since March 2006 and very high financing cost due to huge outstanding receivables from the GoP. Concerted efforts are continuously being made for the recoveries from the government to lower the impact on profitability and cash flow.

As such, despite higher sales volumes and record sales revenue of Rs. 198 billion, higher by Rs. 44 billion from last year, the company’s profits dropped significantly vs last year when it had the benefit of inventory gains as oil prices were continuously increasing in that period. PSO’s profit before and after tax this year were Rs. 1.8 billion and Rs.1.1 billion respectively as compared to Rs. 5.3 billion and Rs 3.4 billion last year.

The Board of Management announced a 1st interim cash dividend of Rs. 6/- per share translating into a cash payout of Rs. 1,029 million to its shareholders.

The company marked 30 years of its existence on December 30, 2006 through celebrations across its nation-wide network. At a ceremony, the management also recognized the services of employees who had completed three decades of association with PSO.

The Pakistan Chapter of the World Business Council for Sustainable Development was also launched in the review period with PSO being the founder member.

In the field of Health, Safety and Environment (HSE), the six months under review were again a zero-accident period. PSO received the NFEH HSE Excellence Award 2006 as well as the Occupational Health & Safety Excellence Award 2006 from HELP International.

The company introduced new Prepaid Cards with various currency denominations and colors to cater to the market needs; entered into a customer facilitation alliance with Saudi Pak Commercial Bank through the launch of ATMs at PSO flagship retail outlets; and signed an agreement to facilitate Sui Southern Gas Company customers in payment of their gas bills at PSO stations.

The Board observed the company continues to maintain its thrust on upgradation, expansion and technology-driven investments as well as high profile enhancement in business and market share through diversification and alliances.

The Board expressed its confidence that the management remains well poised to realign its strategic corporate initiatives and plans in time to take advantage of changing global and local business environment to provide ever-better products and services to its customers.