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PSO expects 40 pc rise in profit

RECORDER REPORT

KARACHI: Pakistan State Oil's profit is expected to show a boost of 40 percent to Rs 2,600 million for the year 1998-99 due to tax write-back and inventory gain on account of significant price increase in POL products, analysts said.

The company is expected to announce its financial results for the year 1998-99 on January 15. PSO being a state-owned entity, the change of guard in Islamabad delayed the result announcement. Earlier, the company mostly announced its results in November or December.

According to a brief report prepared by Adnan Kundi of ABN AMRO Securities, the PSO is expected to show a healthy growth of 40 percent at Rs 2,600 million. The profit would improve by Rs 600 million tax write back and Rs 540 million inventory gain on account of significant price increase in POL products.

He added that earnings estimate of Rs 2,600 million translates into earning per share of Rs 22 per share- a 40 percent growth on year to year basis, thus giving enough room to the company to maintain its historic payout ratio.

The company is expected to pay 50 percent cash dividend and 30 percent bonus shares for the shareholders. The company has already paid 30 percent cash as interim dividend. Despite the expected improvement in overall earnings, according to report, core profits for FY99 will actually decline by 9.5 percent (excluding the impact of the tax add back and inventory gain). This is because of the reduced furnace oil volumes, on which PSO used to be heavily dependent.