Karachi: Pakistan State Oil Company (PSO) announced a significant decline in its second-quarter fiscal year 2026 earnings, posting an unconsolidated profit of Rs2.7 billion, or earnings per share (EPS) of Rs5.82. The results reflect a 62% year-over-year decrease, and a 71% decline from the previous quarter, falling short of industry expectations due to higher-than-anticipated inventory losses and an elevated effective tax rate.
According to JS Global, PSO's half-year fiscal 2026 earnings reached Rs12.1 billion, or an EPS of Rs25.82, marking an 8% increase compared to the Rs11.2 billion profit, or EPS of Rs23.81, reported in the same period last year. The company's net sales for the second quarter of fiscal year 2026 fell by 9% year-over-year to Rs761 billion, primarily driven by reduced volumes, with motor spirit (MS) and high-speed diesel (HSD) sales declining by 11% and 16%, respectively. However, on a sequential basis, net sales increased by 3% due to a 27% recovery in HSD volumes during the quarter.
The company recorded gross margins of 2.24% in the second quarter of fiscal year 2026, compared to 2.99% in the same quarter last year and 4.08% in the first quarter of fiscal year 2026. The lower gross margins were mainly attributed to higher inventory losses resulting from decreased fuel prices, specifically MS and HSD. The effective tax rate for the company rose to 62% in the second quarter of fiscal year 2026, up from 53% in the same quarter of the previous fiscal year and 54% in the first quarter of fiscal year 2026. On turnover, the effective tax stood at 0.58% in the second quarter of fiscal year 2026, compared to 0.96% in the same quarter of the previous year and 1.52% in the first quarter of fiscal year 2026.
Finance costs in the second quarter of fiscal year 2026 decreased by 38% year-over-year and 9% quarter-over-quarter to Rs5.4 billion, mainly due to a decline in borrowing rates coupled with a lower debt level. Additionally, PSO's balance sheet indicates that trade debts fell to Rs412 billion in the second quarter of fiscal year 2026, compared to Rs426 billion in the first quarter of the same fiscal year, and Rs437 billion in June 2025.
The post Pakistan State Oil Reports 62% Drop in Quarterly Earnings Amid Higher Inventory Losses appeared first on Pakistan Business News.