Pakistan: POL's Profit Increases 11% Due to Higher Sales

Pakistan Oilfields Limited’s (POL) consolidated profit increased almost 11% to Rs3.11 billion in the quarter ended March 31, 2018 mainly due to a notable rise in net sales, according to a notice sent to the Pakistan Stock Exchange (PSX) on Monday.

The higher sales were fully backed by increased production of oil and gas, increase in the benchmark Arab light oil price and rupee depreciation during the three months (January-March 2018), said analysts. POL’s share price fell 0.46% or Rs3.19 to close at Rs692.87 with 124,200 shares changing hands at the PSX.

In the same quarter last year, the profit of the oil and gas exploration and production company had stood at Rs2.81 billion. Earnings per share rose to Rs13.15 in Jan-Mar 2018 compared to Rs11.86 in the corresponding period of previous year. Net sales rose 15% to Rs8.95 billion from Rs7.77 billion in the corresponding period of previous year.
“Net sales are up mainly due to higher average Arab light oil price by 24% (to $65.76 per barrel) year-on-year basis, depreciation of the rupee against the US dollar by 6% and increased oil and gas production by 11% each,” Sherman Securities’ analyst Aftab Awan said in post-result comments.

Besides, much-needed support to the earnings came from other income, including from bank deposits and currency exchange, which improved notably to Rs653 million from Rs219 million.

The rate of tax on profit dropped 7.05 percentage points to 16.90% (Rs633 million) from 23.75% (Rs876 million) in the same quarter in 2017. On the flip side, the company paid royalty (on oil and gas finds) of Rs1.36 billion, which was more than double the Rs669 million paid in the corresponding period of previous year. Moreover, finance cost increased almost three-fold to Rs543.5 million from Rs195 million.

“Finance costs have increased…likely due to exchange losses after rupee depreciation against the US dollar. Similarly, other income has also increased…due to exchange gains on foreign currency accounts,” Taurus Securities said in its comments. Exploration costs slightly rose to Rs275 million from Rs246 million.

Nine-month profit

Cumulatively, in the nine months ended March 31, POL’s consolidated profit improved 4% to Rs7.89 billion (earnings per share Rs33.31) compared to Rs7.85 billion (earnings per share Rs31.93) in the same period of last year.