Record revenues, record profits and record market capitalisation, Pakistan State Oil has everything going right for itself. Even the rising inter-corporate circular debt did not take away the shine from the largest OMCs the financial performance in FY14. A 73 percent jump in the firm's earnings along with Rs8 per share cash dividend and 10 percent bonus dividend in FY14 was a treat for the shareholders.
While PSOs market share slipped slightly in FY14 versus FY13 in the three major petroleum products (furnace oil, high speed diesel and motor gasoline), the fall makes little impact to a firm that holds more than 50 percent of the market while it closest competitor is at 10 percent market share.
In FY14, the company crossed Rs1.4 trillion mark in sales revenue and retained leadership in oil market with 73 percent share in black oil and 53 percent share in white oil. For individual petroleum products, the OMCs share in motor gasoline stood at 49 percent, while that of furnace oil and HSD hovered around 73 percent and 53 percent, respectively.
However, this decrease in market share came from some changes in PSOs business strategy. In FY14, the firm has devised and implemented a strategy that maximizes profitability growth while rationalising it product portfolio by adopting smart selling approach. This balance between volumetric sales and profitability helped the firm achieve stellar earnings in FY14 by rationalising the incentives and discounts and limiting its offerings to the cases where business value could be established.
The firms overall profitability has benefited from the managements strategy. So while PSO has been adopting smart ways to manage its volumetric sales, the firm's net margins have continued to escalate from -0.9 percent in FY09 to 2.05 percent in FY14. PSOs normal profit, after tax excluding, the IPP interest income and other extraordinary items also increased by a hefty 31 percent year on year in FY14.
Comments
Comments are closed.