Unconsolidated: PSO reports loss of Rs4.56bn in 2QFY23

Pakistan State Oil Company Limited (PSO) on Friday reported its unconsolidated loss for the second quarter of fiscal year 2023 (October-December 2022) clocked in at Rs4.56 billion, compared with profit after tax of Rs20.2 billion reported in the same period last year.

Resultantly, loss per share was recorded at Rs9.7 in 2QFY23 as compared to earnings per share (EPS) of Rs43.02 in SPLY.

According to the notice to the Pakistan Stock Exchange (PSX) on Friday, PSO’s net sales during the quarter ended December 31, 2022, rose to Rs843 billion compared to Rs522.749 billion in SPLY, which equates to a 61.3% jump.

The increase in topline was “supported by increased retail prices, which have been up significantly since May 22,” said AKD Securities.

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However, PSO’s gross profit in 2QFY23 decreased by 81.8% to Rs4.841 billion from Rs26.663 billion in the preceding year.

AKD Securities said in a note that earnings were lower than expected “due to higher inventory losses during the quarter, estimated at ~Rs13.4 billion as refined fuel prices fell exorbitantly during the quarter, subsequently resulting in gross margins to end at 0.6% for the period.”

“Significant inventory losses arose (Rs13.4 billion vs. our estimate of Rs12.2 billion) on the back of falling fuel prices internationally, as ex-refinery prices for MS/HSD fell by 18%/11% during 2QFY23 as compared to the quarter before.

“Another major difference occurred due to higher finance costs of Rs7.66 billion (up 8.7x on an YoY basis), as short-term borrowings ballooned up to Rs248 billion as per latest accounts (up by Rs92 billion vs. June'22),” added the brokerage house.