Pakistan State Oil (PSO), Earnings on the Rise Despite Lower Sales

Pakistan State Oil (PSO) is expected to report strong profit growth for the fourth quarter of FY25, even though its sales revenue is down compared to last year.

Fourth quarter highlights

For 4QFY25, PSO’s earnings per share (EPS) are expected at PKR 12.6, with profit after tax doubling from last year and rising 45% compared to the previous quarter. The improvement comes despite a 12% drop in sales from the same period last year, mainly due to lower fuel volumes sold. Volumes fell 5% year-on-year but were up a healthy 23% from the last quarter.

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Full-year performance

For FY25 as a whole, PSO’s EPS is expected at PKR 45.2, with total profit rising 34% year-on-year. Sales for the year are likely to be 12% lower than last year, again due to lower fuel volumes.

Why are profits rising?

• Lower Finance Costs: Borrowing costs have dropped sharply (down 37% YoY in the quarter) thanks to lower interest rates and reduced short-term loans.
• Better Margins: PSO benefited from lower inventory losses due to favorable pricing trends.
• Debt & Receivables Control: Short-term borrowings fell by 10% and receivables dropped by 7% from last year, including a 6% reduction in circular debt receivables.

Dividend boost

The company is expected to announce a final cash dividend of PKR 15 per share for the year, higher than last year’s PKR 10. This is in addition to its strong earnings growth, making it a positive signal for shareholders.

Even with lower sales volumes, PSO has managed to deliver better profits by cutting borrowing costs, improving margins, and controlling receivables. Investors will likely see the higher dividend as another reason to stay confident in the stock.

Source: Taurus Securities Limited

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⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →