Karachi February 15, 2008: The Board
of Management (BoM), Pakistan State Oil (PSO), on Friday, February 15,
2008 declared a cash dividend of Rs 6 per share to its shareholders for
the first half of financial year 2007-08 ended December 31, 2007.
The announcement came following the BoM review of the first half of FY07-08
performance of the country’s largest oil marketing entity. Sardar
M. Yasin Malik, BoM Chairman, presided over the meeting.
Despite intense domestic competition PSO was able to sell over 6.2 million
tons of POL products, showing a 13% growth and translating into an all
time high sales turnover of Rs 248 billion - an increase of 25% over prior
year. The all time high profit before tax of Rs 8.2 billion and profit
after tax of Rs 5.5 billion was achieved owing to 13% higher sales volume
as well as due to inventory gains during the period. It may be pertinent
to observe that PSO has approximately 80% of the country’s storage
capacity and has recorded gain or loss on its stock depending upon international
oil price movement. Last year the company had an inventory loss during
the same period.
Based on the improved performance, the Board of Management announced the
second interim cash dividend of Rs 6 per share, in addition to the first
interim dividend of Rs 5 per share translating into a cash payout of Rs
1.9 billion to its shareholders which is Rs 5 per share more than the
prior year period.
During the first half of FY08, international crude oil prices averaged
over $78 / bbl as against $61 / bbl in 1HFY07. The trend of increase in
crude price witnessed in the first quarter of FY08 continued during the
second quarter, with OPEC basket price peaking at $92 / bbl during the
first half as compared to $73 / bbl during the same period last year.
Throughout the first half the company continued to face liquidity problems
due to ever-increasing receivables from the government resulting in galloping
financial cost. Despite the rising international prices, government continued
to provide the subsidy in diesel, which touched its highest ever level
at Rs 17.14 per litre in December 2007. At this level of subsidy the sale
price of diesel would have been Rs 54.87 per litre vs current price of
Rs 37.73 in the market.
The subsidy accumulation on account of Price Differential Claims (PDC)
reached a level of Rs 26 billion at the end of November, however, a reimbursement
of Rs 12 billion was received through financing arrangement with a syndicate
of banks, thus mitigating the cash flow crunch to some extent. The company
is pursuing another similar arrangement to address the increasing PDC
receivable.
Following a 13% growth in sales volume PSO was able to enhance its overall
market share to approximately 70% compared to 67.4% in the same period
last year. The company outperformed its competitors by recording 14% increase
in White Oil sales volume against industry growth of 10%, whereas Black
Oil sales increased by 11% versus a single digit industry growth of 6%.
Consequently, the company improved its market share in Motor Gasoline
from 46.3% to 50.1%, while High Speed Diesel market share increased to
62.9%. Similarly, Jet A-1 market share increased to 63.6% vs 62.8% in
the same period last year. In fuel oil, the company maintained its leadership
with 81.5% market share.
PSO has been maintaining strong focus on enhancement of Non-fuel retail
business. Accordingly ATMs were installed in collaboration with leading
banks at selected retail outlets. The company also established food outlet
as part of its QSR network plan in collaboration with a foreign fast food
chain at one of its retail outlet, which is the first internationally
recognized quick service restaurant (QSR) established at any OMC’s
forecourt in Pakistan. PSO customers can now experience state-of-the-art
car cleaning solution ‘Wash Express’ which has been introduced
at selected outlets.
In order to maintain its leadership position in aviation industry, PSO
developed exclusive aviation, consumer and retail facilities at the newly
developed Sialkot International Airport (SIAL) inaugurated by the President
of Pakistan in December 2007. PSO’s refueling facility at SIAL is
fully capable of providing services to larger body aircraft as per international
Aviation Quality Control & Safety Standards.
The Pakistan Credit Rating Agency (PACRA) assigned your company a long-term
and short-term entity ratings of ‘AAA’ and A1+ which is the
highest credit ratings in PACRA’s rating scale.
During the period under review, PSO also won the Pakistan Society of Human
Resource Management (PSHRM) Most Preferred Local Company Award thus moving
towards becoming the ‘Employer of Choice’. The company also
won ICAP-ICMAP ‘Best Corporate Report Award 2006 in Fuel and Energy
sector.
The Board expressed its confidence that the management remains well poised
to meet anticipated market challenges and continue to deliver improved
performance. |
