Half-Year Financial Results PSO's profit soars 57 percent

Net profit of the Pakistan State Oil (PSO) soared 57 percent to Rs6.72 billion in the half-year period ended December 31, 2015 on volumetric sales and low finance cost, analysts said on Tuesday.

The state-owned oil marketing firm reported a net profit of Rs4.28 billion in the same period a year ago. The earnings per share was recorded at Rs24.76 in July-December 2015 as compared to Rs15.67 in the corresponding period of 2014, the company announced in a notice filed to the Pakistan Stock Exchange.

The PSO’s board recommended an interim cash dividend of Rs5/share.

“Sales revenue of the company declined in rupee denomination, but it recorded growth in volumetric term,” said Umair Naseer at Topline Securities.

Net sales decreased 30 percent to Rs353.96 billion in the half-year period from Rs508.28 billion in the corresponding period.

The analyst said sharp fall in prices of petroleum products caused decline in revenue. Prices of furnace oil, motor gas and high speed diesel were down 52 percent, 20 percent and 18 percent, respectively in the quarter ended December 31, 2015.

“Sharp fall in oil prices offset 14 percent year-on-year volumetric growth in oil sales during the quarter,” Naseer said. 

Furnace oil volumes of the company improved 16 percent to three million tons and motor gas and high speed diesel volumes increased nine percent to 0.5 million tons and 16 percent to 0.9 million tons, respectively. 

The PSO booked Rs13.20 billion profit from operations, 15 percent higher than Rs11.44 billion, while operating expenses dropped 18 percent to Rs6.11 billion from Rs7.42 billion. The finance cost slid 39 percent to Rs3.60 billion from Rs5.50 billion.

Saad Yousuf at KASB Securities said operating expense and finance cost of the company declined mainly to reflect lower oil prices and short-term borrowings.

“We believe lower oil prices will positively contribute to the cash flows of the company on the back of low working capital requirements,” Yousuf said.

Besides, the share of profit of associates (net of tax) jumped to Rs388.78 million in 2015 from Rs23.39 million in 2014.

The PSO booked net profit of Rs3.47 billion (earnings per share of Rs12.78) in the quarter ended December 31 as compared to net loss at Rs960.16 million (loss per share of Rs3.53) in the same quarter last year.

OGDCL’s profit drops 28 percent

Oil and Gas Development Company Limited’s (OGDCL) net profit dropped 28 percent to Rs34.20 billion in the half-year ended December 31, 2015 due to slowdown in production and lower sales, analysts said on Tuesday.

The state-run oil and gas exploration and production company earned net profit of Rs47.82 billion in the same half last year. The earnings per shares remained at Rs7.95 as compared to Rs11.12, the company announced in a notice filed to the Pakistan Stock Exchange.

The company’s board recommended interim cash dividend of Rs1.20/shares for the shareholders whose name will appear in the register of members on March 14, 2016. This is in addition to the previous interim dividend already paid at Rs1.50/shares.

Muhammad Affan Ismail at BMA Capital said the notable decline in earnings can be attributed to 27 percent year-on-year decrease in sales owing to 49 percent lower average oil price and three-four percent slowdown in production.

The company sales dropped to Rs86.18 billion from Rs118.64 billion. Other income declined 19 percent to Rs8.29 billion from Rs10.22 billion last year.

The analyst said the other income dropped owing to possibly lower exchange gains on account of relative stability in rupee/dollar during the half under review, Affan said.

Exploration cost decreased to Rs4.71 billion in the period under review from Rs6.27 billion in the corresponding period.

Alone in the last quarter, the net earnings declined 18 percent to Rs15.94 billion (earnings per share at Rs3.71) from Rs19.51 billion (earnings per share atRs4.54) in the same quarter last year.

DG Khan Cement’s profit up 13 percent

DG Khan Cement’s (DGKC) consolidated net profit increased 13 percent to Rs3.83 billion in the half-year ended December 31, 2015 owing to high local sales and cement’s stable price, analysts said on Tuesday.

The cement manufacturer earned a net profit of Rs3.40 billion in the corresponding period last year. Earnings per shares stood at Rs8.75 as compared to Rs7.77, said a notice filed at the Pakistan Stock Exchange.

The DGKC’s board approved an investment of up to Rs1.26 billion by way of purchasing shares of Adamjee Insurance Company Limited at the prevailing stock market rate. “The board has authorised chief executive officer, chief financial officer and company secretary of the company to undertake the decision of purchase transaction as and when deemed appropriate in the interest of the company and its shareholders," Khalid Mahmood Chohan, company secretary, said in the bourse filing.

The firm said its sales rose five percent to Rs14.70 billion from Rs13.94 billion last year. The cost of sales dropped 7.14 percentage points to 63.30 percent (or Rs9.30 billion) of the sales from 70.44 percent (or Rs9.82 billion) in the corresponding period last year.

The other income increased 19 percent to Rs1.35 billion from Rs1.13 billion. The finance cost dropped to Rs98.86 million from Rs211.31 million last year.

Shajar Capital said DGKC’s sales increased on the back of higher domestic demand, up nine percent on yearly basis in the half under review. “The shift in sales mix to local improved margins by eight percentage points to 40 percent on year-on-year basis,” it added.

Alone in the last quarter, DGKC net profit improved 10 percent to Rs2.44 billion (earnings per share at Rs5.58) from Rs2.21 billion (earnings per share at Rs5.07) in the same quarter last year.

PPL’s profit drops 47 percent 

Consolidated net profit of Pakistan Petroleum Limited (PPL) dropped 47 percent to Rs12.06 billion in the half-year ended December 31, 2015, a bourse filing said on Tuesday.

The state-owned oil and gas exploration and production company earned net profit of Rs22.64 billion in the same period last year. The earnings per shares was recorded at Rs6.12 in the half under review as compared to Rs11.49 in the corresponding period, PPL announced in a notice issued to the Pakistan Stock Exchange.

Shahbaz Ashraf at Arif Habib Limited said PPL plugged and abandoned two wells, which would adversely impact its earnings in 3QFY16. “The exploration activities in TAL Block and wells from Gambat South Block coming online can provide impetus to the earnings,” Ashraf said.

The company’s board recommended an interim dividend of Rs2.25/share on fully paid ordinary shares and Rs2.25/share on fully paid convertible preference shares. The dividend entitlement will be paid to the shareholders whose names will appear in the register of members at the close of business on March 14, 2016.

The company's net sales declined 29 percent to Rs41.57 billion in the half-year from Rs58.41 billion in the corresponding period. Finance cost surged nine percent to Rs332.88 million from Rs304.96 million.

In the quarter ended December 31, PPL’s net profit dropped 30 percent to Rs6.30 billion (earnings per share at Rs3.20) from Rs8.96 billion (earning per share at Rs4.55) in the same quarter last year.

Ashraf said the company recorded flat sales in the last quarter (October-December 2015) mainly on the back of 14 percent increase in oil production, seven percent increase in gas production and stagnant gas prices in the quarter. “However, the wellhead prices are expected to be revised downwards for the quarter,” he added.

The exploration cost declined 10 percent on quarter-on-quarter basis. “In our opinion lower quarter-on-quarter seismic activities have contributed in the decline of field expenditure. On the other hand the company may have recorded a drywell namely Nooriabad X-1 in Jungshahi block, however we await clarity on the aforementioned drywell,” he said. The other operating expenses jumped six folds to Rs2.62 billion.

Fauji Cement’s profit surges 66 percent 

Fauji Cement Limited’s (FCCL) net profit jumped 66 percent to Rs2.77 billion in the half-year period ended December 31, 2015 on the back of higher sales and lower coal prices and power tariff, analysts said on Tuesday.

The cement manufacturer reported net profit of Rs1.66 billion in the same half last year. This translated into earnings per share of Rs2.09 as compared to Rs1.25.

The company’s notice at the Pakistan Stock Exchange said the board recommended a cash dividend of Rs1.75/share.

Yawar Uz Zaman at Shajar Capital said the company’s gross margins escalate 11 percentage points to 46 percent in the half-year amid upsurge in net retention prices and subdued coal prices. Gross margins went up six percentage points to 48 percent (highest in the history) during the last quarter.  Zaman said average international coal prices during the year witnessed double digit decline. Together with this, power tariff reduction is the primary reason for the rise.

Net sales surged 11 percent to Rs9.95 billion in July-December 2015 from Rs8.99 billion in the same period of 2014.

The cost of sales dropped 10.77 percentage points to 53.99 percent (or Rs5.37 billion) of the sales from 64.76 percent (or Rs5.37 billion). The finance cost dipped 21 percent to Rs319.82 million from Rs402.36 million.