Islamabad: Pakistan Oilfields Ltd (POL) announced a 17% year-on-year decline in earnings for the second quarter of the fiscal year 2026, with profits amounting to Rs6.3 billion, or Rs22.16 per share. Despite this decrease, the earnings exceeded expectations due to higher other income and a reduced effective tax rate.
According to JS Global, the company experienced a quarter-on-quarter earnings growth of 16%, contributing to a 16% year-on-year increase for the first half of FY26, with earnings per share reaching Rs41.29. The effective tax rate decreased to 26% in the second quarter compared to 37% in the same quarter last year and 33% in the first quarter of FY26.
POL's net sales for the quarter were reported at Rs14.5 billion, a 2% decrease from the previous year but an 11% increase from the last quarter. The quarter-on-quarter improvement is attributed to a rise in oil and gas volumes. Exploration costs significantly increased, reaching Rs2.0 billion, driven by seismic acquisitions in the Pariwali Dand P and Ikhlas EL regions.
Royalty expenses rose to Rs1.7 billion, reflecting a 2% year-on-year and 14% quarter-on-quarter increase. Operating expenditures also grew by 9% from the previous quarter, totaling Rs3.3 billion, in line with increased sales volumes.
Other income saw a 51% year-on-year decline, attributed to falling interest rates, but increased by 22% quarter-on-quarter, possibly due to lower exchange losses. The company declared a cash dividend of Rs27.50 per share for the second quarter, with a half-year payout ratio of 67%, slightly down from 70% in the first half of FY25.
JS Global maintains a "BUY" recommendation for POL, noting that the company is trading at a projected price-to-earnings ratio of 6.8 for FY26 and 5.5 for FY27.
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