Declares Rs 4.7 billion FY07 profit; 110% final dividend

Aug 13 - 19, 2007


Pakistan State Oil (PSO) registered an impressive performance with a turnover touching Rs 411 billion (US$ 6.8 billion) compared with Rs 353 billion a year ago, an increase of 17%. Profit before tax recorded at Rs 7.1 billion versus Rs 11.4 billion last year and profit after tax at Rs 4.7 billion against Rs 7.5 billion registered in previous financial year. The earning per share was Rs 27.34 versus Rs 43.87 last year.

The Board of Management (BoM) of Pakistan State Oil Company Limited (PSO) reviewed the performance of the company for the financial year ended June 30, 2007 has approved the audited financial statements for the year.

Based on the strong financial results, the BoM under the chair of Pervaiz Kausar, announced a dividend of Rs 11 per share. Combined with the earlier interim dividends aggregating Rs 10 per share, the total dividend for the year rose to Rs 21 per share translating into a total payout of Rs 3.6 billion to the shareholders.

The first half of the review period saw a declining trend of international oil prices resulting in heavy inventory losses to the industry in general and the company in particular. However, in the last two quarters the trend reversed nullifying the negative impact to some extent. The earnings were also adversely affected by a substantial increase in financing cost on mounting dues from the government on account of subsidy on retail price of diesel as well as the full-year impact of 20% margin reduction.

Black oil industry consumption increased by 46% mainly due to higher off-takes of furnace oil by the power producers. White oil industry consumption remained subdued with a decline of 2% due to availability of alternate fuels and higher gasoline prices. Overall, PSO led the industry with a market share improvement from 65% last year to 69%, despite increasing competition.

PSO presence with around 3,700 sites across the country, including over 1,600 New Vision Retail Outlets and PSO cards, continued to provide impetus to retail sales. The company completed refurbishment of its Lubricant Manufacturing Terminal at Korangi, Karachi, which will further improve its performance in the lubricant business during financial year 2008.

PSO continued using technology to provide conveniences to customer. Under technological thrust, new initiatives and marketing alliances the company in the review period introduced ATM and utility bill payment facilities, new fleet management solution for PSO card customers, new denomination of prepaid cards and GPRS and, V-SAT connectivity with retail sites. It also enhanced its point-of-sale terminal network to facilitate and automate business transactions to more than 1,300 retail sites.

As part of its corporate social responsibility, company continued to support social, educational, health, sports and community causes. The company and its employees took active part in the relief efforts for the flood victims in Balochistan and sent consignments of relief goods and ensured fuel supplies to the affected areas. Employees also contributed one-day salary to the President's Disaster Relief Fund.

During the year, company participated in the Oil and Gas Conference (OGCON), Ideas 2006, Expo 2007 and Oil, Gas and Energy Conference (POGEE) 2007. It continued its active role at national/international levels and Pakistan chapter of World Business Council for Sustainable Development was expanded with more members joining in.

The board acknowledged and appreciated the efforts and contributions by the dedicated PSO employees, dealers, contractors, vendors and other business partners and expressed its confidence that the company will continue to take up business challenges in the future through its highly motivated team, superior services, innovations and growing customer loyalty.


Pakistan automobile market could not sustain the growth momentum and posted a decline of 5% in the financial year 2007, however the current financial is likely to regain the momentum, said auto market analysts.

The market at a glance mirrors that passenger Cars & LCVs in the form of locally produced CKDs (completely knocked down),imported New CBUs and Used CBUs. Market size saw an addition of 234,000 vehicles in FY07 as against 247,000 units in FY06.

During the period, the CBU category of both used and new vehicles registered declines respectively at 47% and 38%. However, the CKD segment depicted a positive trend though a meager one, 6% versus that of previous year. The decline in overall market is attributable to higher auto financing rates which are currently hovering at 15% compared to 10% 2005 and a restriction to import only 5 year or less older cars that imposed in FY07 Budget.


Sales of locally assembled vehicles or CKDs remained bleak with 6% growth in FY07. Cumulative sales of locally made PC & LCVs recorded at 204k units in FY07 against 193,000 vehicles sold in FY06.

The growth pattern as observed in FY07 is, however, on the lower side than the historical trend, where 3-year (FY04-06) CAGR of 35% was achieved. The decline in growth rate is due to expensive car financing along with the high base affect of previous years.

Nonetheless, CKD has regained its lost share from CBUs (new & used) in total market, which has increased to 87% in FY07 from 78% in FY06.

CKD segment could be sub-divided into PC and LCVs. In FY07, locally produced PC sales were recorded at 165k up 6% over 156k sold in FY06. With rising trading and economic activities, LCV segment saw better growth rate with sales of 39k units versus that of 32k previously a growth of 22%. And due to this, share of LCVs has also improved in the CKD pie to 19% from previously 17%.

The market share of used CBUs have started to shrink as the government has imposed restriction to import only 5 year or less older cars in FY07 budget. CBUs share in total market has dropped to 13% as compared to 22% of previous year. During FY07, 30k CBUs (5k New and 24k Used CBUs) were imported. In the overall market, used cars captured 10% market share, which was at 19% a year earlier.


Pakistan automobile market is likely to grow by 12% to 262,000 Units in the financial year 2008. CKD segment is likely to witness highest growth in FY08, during which the CKD sales are projected at 242,000 (194,000 PC and 48,000 LCVs). On the other hand, used CBUs share is expected to decline as government has further restricted the age of used cars to 3 years.