OGDC’s profit down 7% in FY24 despite higher sales

Oil and Gas Development Company Limited (OGDCL), the country’s largest exploration and production (E&P) company, reported a profit-after-tax (PAT) of Rs208.98 billion for fiscal-year ended June 30, 2024.

Earnings registered a decline of nearly 7% as compared to Rs224.62 billion in the same period of the previous year (SPLY), showed the E&P’s latest financial results provided to the Pakistan Stock Exchange (PSX) on Monday.

The board of directors met on September 23 to review the company’s financial and operational performance and also approved a final cash dividend of Rs4 per share i.e. 40%. This was in addition to interim cash dividend already paid at Rs6.1 per share or 61%.

OGDC’s profit jumps 30% in 1HFY24

Earnings per share (EPS) were recorded at Rs48.59 in FY24 as compared to EPS of Rs52.23 in SPLY.

The results were lower than market expectations, which earlier projected earnings of Rs49.5 per share.

“Earnings (are) lower than expectations due to higher than expected operational expenses,” said Topline Securities.

The decline in profit comes despite increased sales and lower taxation paid during the period.

ODGCL’s revenue from contracts with customers rose to Rs463.69 billion compared to Rs413.59 billion in SPLY, which is up by over 12%.

The E&P’s gross profit registered a gain of 5%, clocking in at Rs283.31 billion in FY24, compared to Rs269.73 billion in FY23.

However, despite higher earnings, the company’s profit margin dropped to 61.1% in FY24, as compared to 65.2% in same period previous year

During the period, the E&P’s saw a significant decline of over 73% in its other income, which stood at Rs41.34 billion in FY24, as compared to Rs154.69 billion in FY23.

On the other hand, the company’s exploration and prospecting expenses reduced by nearly 34%.

However, its cost of finance increased to Rs7.14 billion in the year ended June 30, 2024, as compared to Rs4.72 billion in the same period last year, a jump of over 51%.

The higher finance cost during the period could be attributed to the rise in interest rates during the period.

OGDCL’s share of profit in associates clocked in at Rs13.19 billion in FY24, compared to Rs10.54 billion in SPLY, an increase of over 25%.

OGDCL profit before tax clocked in at Rs293.79 billion in FY24, registering a decrease of over 23% year-on-year.

Consequently, the E&P paid lower taxes to the tune of Rs84.81 billion in FY24, as compared to Rs159.15 billion in SPLY, a decline of nearly 47%.

OGDCL was incorporated on 23 October 1997 under the Companies Ordinance, 1984. The company was established to undertake exploration and development of oil and gas resources, including production and sale of oil and gas and related activities formerly carried on by Oil and Gas Development Corporation, which was established in 1961.