PSO's net profit during the first quarter ended September 30, 2004, is expected to increase by 29-33 percent because of higher sales of high speed diesel and furnace oil. According to a leading analyst, the profit for the period may range from Rs 1.29 billion to Rs 1.33 billion (EPS Rs7.50-7.75), compared to 1QFY04 net profit of Rs 1.0 billion (EPS Rs5.84).
Increase in profit is mainly expected due to higher retail prices and increasing petroleum oil products demand. Even though HSD, Mogas, Kerosene, and LDO prices are constant since May, average retail prices were still higher by 15-27 percent, compared to similar period of last year.
FO prices are increasing due to increasing global oil prices. Since FO market is completely deregulated, PSO is benefiting from higher price.
Also, FO demand had increased by 42 percent during July-August FY04.
Increase in FO demand is mainly from IPPs due to higher dependence on thermal power generation this year. Since PSO has long-term supply contracts with IPPs, it is the major beneficiary of rising FO demand. PSO has increased its market share in FO to 77 percent, during July-August FY05, from 71 percent in FY04.
In white oil products, demand for which is increasing at a double-digit rate, PSO has been maintaining its market share through product development, increase in new vision outlets, and aggressive innovative marketing. However, the company has been losing market share in high margin lubes market.
Looking at the past trend, PSO is not expected to announce cash dividend with the results.
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