Pakistan State Oil Company Limited (PSO), the leading oil marketing company in the country, has earned a record Rs 14.053 billion profit after tax in the fiscal year ended June 30, 2008 as compared to Rs 4.689 billion earned in the corresponding period in FY07.

The company's earning per share surged to Rs 81.94 in the period under review against Rs 27.34 in the same period a year back. The board of management of PSO in its meeting held here on Tuesday reviewed the performance of the company for the financial year ended June 30, 2008 and approved the audited financial statements for the year. Sardar Muhammad Yasin Malik, Chairman, BoM, presided over the meeting.

The board recommended a final cash dividend for the financial year at the rate of Rs 12.5 per share, equivalent to 125 percent. This is in addition to already paid first interim dividend at Rs 5 per share ie 50 percent and second interim dividend at Rs 6 per share ie 60 percent.

In a statement issued by PSO, it said the board observed that during financial year 2008 the company achieved impressive performance with a turnover touching Rs 583 billion (8.5 billion dollars) compared with Rs 411 billion a year ago, an increase of 42 percent. Profit before tax recorded at Rs 21.4 billion against Rs 7.1 billion last year and profit after tax at Rs 14.1 billion against Rs 4.7 billion registered in previous financial year.

PSO made record earnings during 2008 mainly due to one time inventory gain. Last year the company had an inventory loss. Subsequent to the year-end 2008, the international oil prices have shown a downward trend which, if it maintains a similar trend may cause corresponding inventory loss for the period.

Excluding the one time large inventory gain, the 2008 operating profit increased by about 40 percent in line with the massive growth in both regulated and non-regulated business delivered by the company during the year.

The company's income tax payments during 2008 at Rs 7.3 billion in this period against Rs 2.4 billion last year showed an increase of 200 percent mainly due to 35 percent tax on inventory gain recorded in 2008 accounts. During FY08, PSO sales volume recorded healthy growth of 11 percent against overall industry growth of 8 percent.

The company outperformed its competitors by recording 18 percent increase in White Oil sales volume against industry growth of 13 percent, whereas Black Oil sales increased by 4 percent against industry growth of 1 percent. In furnace oil, the company maintained its leadership with 83 percent market share and registered impressive growth of 4 percent against industry growth of 2 percent.

PSO diesel sales during FY08 were 19.6 percent higher than last year and substantially higher than the industry growth of 13.2 percent. During FY 08, PSO achieved sales volume of 5.3 million MTs for diesel and 0.72 million MTs for mogas against previous year's figures of 4.4 million MTs for diesel and 0.54 million MTs for mogas respectively. These figures depict company's impressive growth of approximately 20 percent in diesel and 33 percent in Mogas sales during FY 08.

During the twelve months ending June 2008, the diesel sales in Pakistan showed an overall volume growth of 0.97 million MTs out of which 0.87 million MTs (89 percent of the total industry growth) was contributed by PSO. It is worth mentioning here that during the crunch month of June 08 when some market players restricted their supplies of diesel due to heavy build-up of subsidy, PSO supplied 30,000 MTs additional diesel to meet the market demand.

During FY 08, PSO continued to play a vital role in importing deficit products in the country and fulfilled 80 percent of country's total import requirements. Besides 3.4 million tons of diesel, 3.5 million tons of furnace oil and 0.44 million tons of LSFO was also imported to ensure uninterrupted supply to the power generation sector.

PSO continued its leadership in providing CNG fuel facilities and added 30 more stations to its network, bringing the total to 240 which is more than any other OMC in the country. In this fuel category the company registered an impressive growth of 30 percent against the industry growth of 24 percent. PSO's CNG earnings during FY08 showed a corresponding increase.

FY2008 witnessed an unprecedented rise in oil prices. US brent crude oil price hit 143 dollars a barrel on 30th June 2008. A major reason underlying soaring oil prices has been weakening of US dollar due to which it is believed that certain investors may have used oil as a hedge against US dollar devaluation due to rising international prices. Throughout the review period the government of Pakistan continued to provide huge subsidy on diesel, which touched highest ever level at Rs 37.07 per litre in June 2008. Throughout FY08 the company continued to face liquidity problems due to ever-increasing receivables from the government on account of Price Differential Claim (PDC) resulting in galloping financial cost.

The board of directors of the company were highly concerned that Pepco, Hubco and PIA substantially delayed payments to PSO specially in the second half of the year thereby seriously aggravating company's liquidity position. As of June 30, 2008, receivables from these entities stood at Rs 27 billion adding to company's cash flow problems.

Being fully aware of the global trend in development of alternative and renewable energy resources, the company is in an advance stage of research and development work on bio-diesel and tests are being carried out to blend it with conventional diesel