PSO’s Finance Costs up 30% in FY24

Staff Report: The finance cost of Pakistan State Oil (PSO) has witnessed major jump by 30 percent year on year basis (YoY) to Rs 52 billion driven by a rise in short-term borrowings due to delayed payments from customers.

Moreover, the company reported other income of Rs10.3bn in 4QFY24, a substantial rise from Rs2bn in 4QFY23 (up 424% YoY) and Rs2.2bn in 3QFY24 (a 371% increase QoQ). This spike is likely due to interest accrued on delayed payments from customers.PSO Management Suggests Equity Swap to Settle Circular Debt

Finance costs had seen a drop by 21% YoY and QoQ to Rs11.9 billion. However, for FY24, finance costs increased by 30% YoY to Rs52bn, driven by a rise in short-term borrowings due to delayed payments from customers.

Pakistan State Oil Company (PSO) announced its 4QFY24 result on Tuesday, reporting an unconsolidated profit of Rs2.5bn (EPS of Rs5.25). The result exceeded industry expectations, primarily due to higher-than-expected other income.

This brings FY24 earnings to Rs15.9bn (EPS of Rs33.79), compared to a profit of Rs5.7bn (EPS of Rs12.06) in FY23, marking a 180% year-on-year increase.

PSO declared a final cash dividend of Rs10/share, aligning with our expectations.

An effective tax rate of 74% was recorded in 4QFY24, compared to a tax reversal in 3QFY24. For the full year (FY24), the tax amounted to 62% of PBT and 0.72% of turnover.

Net sales for 4QFY24 increased by 3% YoY and 7% QoQ to Rs901bn, bringing FY24 sales to Rs3.6trn, up 5% YoY, despite a 15% and 18% decline in MS and HSD sales, respectively. This increase is mainly attributed to higher petrol and diesel prices.

Petrol prices in FY24 averaged Rs280.89/litre, a 15% YoY increase. Similarly, diesel prices averaged Rs286.44/litre, a 12% YoY rise.

On a quarterly basis during 4QFY24, volumetric sales of High-Speed Diesel (HSD) rose by 11% QoQ, while Motor Spirit (MS) saw a 1% QoQ increase.

Distribution expenses decreased by 1% YoY and 3% QoQ to Rs4.8bn.