PSO profit surges 136% in 1QFY26
Higher retail margins and lower finance costs offset inventory volatility
Pakistan State Oil (PSO) reported earnings per share of Rs20 for the first quarter of FY26, a 136% jump from Rs8.5 a year earlier, driven by stronger retail performance and reduced borrowing costs. However, the result came in below market expectations due to lower-than-estimated inventory gains and higher taxation.
Sherman Research analysts said that the oil marketing company’s gross profit rose 21% year-on-year to Rs30bn in 1QFY26, compared with Rs24.7bn in the same period last year. Analysts estimate that the latest quarter included inventory gains of around Rs3.5bn, reversing a Rs2.5bn loss in the previous year, amid volatility in global crude prices. Nevertheless, gross profit from the company’s LNG segment was said to have declined on thinner margins.
Finance costs fell sharply by 43% to Rs6bn from Rs10.4bn last year, mainly due to an 18% reduction in short-term borrowings and a significant drop in benchmark interest rates since mid-2025. The State Bank of Pakistan cut its policy rate by a cumulative 600 basis points during 2H2025 to support industrial and energy sectors, which eased financing burdens across the market.
Improved cash flows from the retail segment and recovery of old receivables helped PSO reduce trade debts by 9% year-on-year. The company ended the quarter with Rs6bn in cash after meeting supplier payments and paring down borrowings, resulting in modest growth of 7% in other income to Rs4.5bn.
PSO’s effective tax rate stood at 48%, slightly above estimates, which trimmed the bottom-line impact of operational gains. The higher taxation reflects the withdrawal of certain temporary fiscal reliefs and the implementation of the Finance Act 2025, which tightened corporate tax compliance for state-owned enterprises.Did pso get stakes in Guddu
With international oil prices fluctuating between $78–$92 per barrel during the quarter, inventory management remains a key determinant of profitability for oil marketing firms. Sector analysts expect PSO’s earnings to normalize in the coming quarters as global prices stabilize and domestic demand strengthens under the government’s ongoing energy reform program.
