KARACHI: Pakistan State Oil (PSO) has announced a net profit of Rs809.864 million translating into an earning per share of Rs4.72 for the quarter ending September 30, 2010 as compared to a profit of Rs1.9 billion and EPS of Rs11.1 in the same period last year.
Though net sales and gross margins remain almost the same compared to last year’s Rs170 billion and 3.9 percent respectively, the decline in earnings was primarily due to the higher financing cost and one percent turnover tax.
The board of PSO was concerned with the turnover tax issue which has increased the company’s tax rate to 72 percent in the quarter under review and adversely affecting profitability. The company hoped that the finance ministry would consider reducing the tax rate in the given scenario.
The board also noted that the circular debt crisis was still a looming concern and by September 30, 2010, PSOís receivables stood at an alarming Rs140 billion. PSO was working closely with the government and Independent Power Producers (IPPs) for the recovery of its receivables and drawing a long-term resolution plan for the rising circular debt, the company said.
The company’s financing cost stood at Rs2.95 billion compared to 1.57 billion last year primarily due to the growing circular debt, which led PSO to rely more on bank borrowings.
Similarly, the company’s effective tax rate stood higher at 68 percent compared to 30 percent last year. This is due to recognition of turnover tax of one percent on net sales of Rs170 billion.
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