The Board of Management of Pakistan State Oil (PSO) convened on Thursday at PSO House, Karachi to review the company's performance for the year ended June 30, 2012. In the period under review, despite stiff challenges, the company has achieved a major milestone by becoming Pakistan's first company with revenues exceeding the trillion rupees mark.
For the year ended June 30, 2012 PSO's revenues exceeded Rs 1,199 billion as compared to Rs 975 billion in FY11, representing a growth of 23%. The company also announced after tax earnings of Rs. 9.06 billion in FY 12 as compared to Rs. 14.78 billion during last year. The profitability was severely impacted by rapid devaluation of Pak rupee alongwith the reduction in inventory gains. These losses have absorbed the improvement in margins of Furnace Oil and HSD alongwith the recovery of financial income from the power sector. Earnings in FY 12 are lower as compared to FY11 due to a deferred tax adjustment made in the previous year amounting to Rs 2.29 billion which had resulted from the reinstatement of the rate of turnover tax by the tax authorities. Further, the financial cost resulting from the accumulation of highest ever receivables continue to constrain both profitability and liquidity of PSO.
In the period under review, the industry's volumes for Black Oil reduced by 8%, whereas, White Oil grew by 4% reflecting an increase in PMG consumption of 22% while a decline of 1% was recorded in HSD demand. In spite of reduction in market size of HSD, PSO has been able to increase its market share from 54.9% to 56%. PSO also continued its overall domination of the market with its share in the Black Oil and White Oil segments standing at 78.1% and 55.1% respectively, thereby contributing to an overall market share of 65.4%.
Based on this performance, the Board of Management has declared a final cash dividend of Rs 2.5 per share in addition to the already paid interim dividend of Rs 3 per share. It was also decided to issue 20 percent bonus share for the year ended June 30, 2012.
To enhance customer confidence in its lubricants, PSO has introduced the latest, technologically advanced and state-of-the-art anti-counterfeit solution with each retail size pack of lubricants called "Secure Code". A 360 degree mega awareness campaign was also launched to raise mass awareness about this unique feature. Further, in order to cater to the high end segment of the lubricant market PSO successfully launched its synthetic brand with Ai formula which is expected to further strengthen its product range.
The nation's largest public sector company also continued to fulfill its role as a responsible corporate citizen and its CSR efforts focused on four major sectors i.e. education, health, community development and women empowerment. In addition to its flood relief efforts, PSO contributed to various charitable organizations across the nation.
The Board Members, while expressing confidence in PSO's management showed increasing concern over the rising balance of receivables which stand at Rs 237 billion as on August 9, 2012. This has created an acute financial crunch on the company as it struggles to meet its international and local obligations. It was noted that this situation is not sustainable and presents a significant risk to PSO's ability to ensure availability of product. PSO's management continues to constantly pursue the IPPs as well as the Government of Pakistan for recovery of its outstanding receivables.