PSO reports 68pc fall in profits

KARACHI: The state-run Pakistan State Oil has reported a steep fall of 68 percent in its profit at Rs6.93 billion for the year ended June 30, 2015, an announcement at the KSE said on Tuesday.
The decline was recorded "due to inventory losses on account of sharp fall in crude prices, increase in finance cost due to prevailing circular debt crisis and less receipt of interest from power sector," said a press statement of the company.
During the year, the Company's profitability has been adversely affected by the sharp decline of 46 percent in the OPEC basket price of crude oil; $109 per barrel in July 2014 to $59 per barrel in June 2015.
"This significant decline in crude oil prices together with drop in black oil volumes by 12 percent resulted in a 21 percent reduction in the sales turnover to Rs1,114 billion as compared to Rs1,410 billion in FY2014," the statement added.
A BMA Capital commentary said: "Near term upside will remain limited owing to potential inventory losses in 1QFY16 result and lower FO margins due to 19 percent quarter-on-quarter decline in average FO prices."
The company had booked profit-after-tax at Rs21.81 billion in the previous fiscal year ended June 30, 2014. The earnings per share fell to Rs25.53 from Rs80.31 in the previous year.
The company announced a final cash dividend at Rs4 per share which along with the interim dividend at Rs6 per share took the full-year payout at Rs10 per share.
The company share declined by Rs11.48, or 3.45 percent, to Rs321.32 with 1.72 million shares turnover at the Karachi Stock Exchange (KSE).
According to the Company's accounts available with KSE, PSO has recorded net sales at Rs913.09 billion in the year, which is 23 percent lower than Rs1,187 billion recorded in the previous year.
The brokerage house added "The result was below consensus expectations due to lower than expected inventory gains in 4QFY15."
The downtick in FY15 earnings can be attributed to 36 percent decline in gross profit, 28 percent lower other income and 15 percent higher finance cost, it said.
The notable decline in gross profit can be attributed to 26 percent lower FO margins and hefty inventory losses of Rs8.3 billion realized in 9MFY15. it said.
Alone in 4QFY15, earning per share of the company improved by 53 percent to R13.6.
"The rebound in 4Q earnings was driven by 29 percent year-on-year higher gross profit and 2.4-time YoY higher other income," the brokerage house said.
The PSO statement added the company continued to dominate the market with its share in the black oil and white oil segments standing at 66.6 percent and 49.8 percent respectively, thereby contributing to an overall market share of 56.8 percent in the year under review. The Company’s sale volume of motor gasoline grew by 18.5 percent in FY 2015 over the same period last year due to upsurge in demand of mogas due to fall in mogas prices and shortage of CNG. Additionally, HSD sales also witnessed an increase of 0.9 percent over SPLY despite the stiff competition faced in the industry.

FCCL earnings at Rs1.5 billion
Fauji Cement (FCCL) announced 4Q2015 earnings of Rs1.5 billion (EPS Rs1.1) as against Rs.631 million (EPS Rs0.5) in the same quarter last year.
This result was well above the market estimates. The result also accompanied an interim cash dividend of Rs1.5 per share (FY15 dividend Rs2.5 per share).
In 4QFY15, FCCL recorded revenues of Rs5.2 billion, up 5 percent year on year YoY, mainly on the back of higher net retention price, we believe.
Gross profit margin improved substantially by 658bps to 42.7 percent in 4QFY15. Impressive GP margin was due to strong local cement prices, lower international coal prices, relieve in power tariff by Rs2-2.5/kwh from Jan 2015 bills and savings from newly installed Waste Heat Recovery (WHR) plant, said Nabeel Khursheed, analyst at Topline Research.
Financial charges during 4QFY15 declined considerably by 50 percent YoY to Rs.123million, thanks to swift deleveraging, stable rupee to dollar parity (foreign currency denominated loan of $43.8 million or 80 percent of long-term financing as of June 2014) and cut in policy rate to 7 percent.
In FY15, FCCL’s revenues clocked in at Rs18.6 billion, up by 6 percent YoY. This was primarily due to 4 percent YoY increase in local cement dispatches to 2.1 million tons. However, exports volume remained dull, down 8 percent YoY to 0.4 million tons, owing to lower dispatches to Afghanistan.
FCCL posted profit-after-tax of Rs4.1 billion (EPS Rs2.9, net of preferred dividend of Rs.241 million for FY15, up 57 percent YoY.