In 9MFY25, Pakistan State Oil (PSX: PSO demonstrated resilience amid a challenging economic and industrial landscape. The company’s earnings increased by 14 percent year-on-year increase, despite industry-wide volume declines due to cost management, a drop in finance costs, and improved liquidity.
PSO’s net sales dropped 13 percent year-on-year in 9MFY25 primarily driven by lower offtakes of motor spirit (MS), high-speed diesel (HSD), and furnace oil (FO)—down 8 percent, 7 percent, and 47 percent year-on-year respectively.
In 3QFY25 alone, revenue fell 16 percent year-on-year affected by a 14 percent dip in total offtakes and softer fuel prices. The pressure on volumes was partly attributed to higher petroleum prices, the end of the Rabi season, and rising competition.
Despite revenue compression, gross margins stayed stable at around 3 percent. The third quarter witnessed a gross margin of 3.2 percent. However, the decline in gross profit was due to inventory losses.
The company achieved a significant reduction in finance costs—down 34 percent year-on-year in 9MFY25, thanks to lower short-term borrowings and easing interest rates. PSO’s liquidity profile further strengthened, with trade receivables decreasing by 14 percent year-on-year, improving cash flows and enabling better financial stability.
On the operational front, PSO retained a dominant 46 percent market share in white oil, including a 46.5 percent share in HSD and a near-monopoly in jet fuel at 99 percent. The company expanded its retail footprint by adding 67 new outlets, bringing the total to 3,641 stations nationwide. It also launched a mobile jet refuelling facility at the New Gwadar International Airport, a notable step in aviation services.
Despite posting lower quarterly earnings in 3QFY25 (down 28% YoY), PSO’s performance over 9MFY25 reflects stability and long-term strategic foresight. Challenges such as reduced sales volumes, inventory losses, and elevated taxationwere counterbalanced by strong cost control, receivables management, and higher other income from financial investments.
Going forward, PSO’s emphasis on renewables, continued focus on trade debt resolution, and its positioning to benefit from potential circular debt resolution in the power sector set the stage for future earnings support.
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