Pakistan Petroleum Limited (PPL) has posted lower-than-expectated earnings for financial year 2015-16 (FY16), but has not disappointed shareholders. The company’s Board of Directors has approved the payment of final dividend of Rs3.50/share, in addition to an interim dividend of Rs2.25/share. This takes the full year dividend to Rs5.75/share.
PPL’s FY16 earnings declined by 55% YoY to Rs17.24 billion (EPS: Rs8.74/share) for FY16, as compared to Rs38.40 billion (EPS: Rs19.47) for FY15. This decline can be attributed to:
1) Topline declined by 24% YoY to Rs80.15 billion for FY16 from Rs104.84 billion due to a 44% YoY plunge in average oil price to US$41/bbl in FY16 as against US$73/bbl in FY15,
(2) Field expenditures grew to Rs44.95 billion in FY16, up by 6% YoY due to aggressive exploration activity, and
(3) Other Income declined to Rs5.42 billion in FY16 YoY from to Rs7.61 billion in FY15, a decline of 29%YoY.
The company did not book further impairment losses associated with MND Exploration & Production Limited in FY16, which was expected to amount up to Rs4.00 billion. Nonetheless, lower than expected earnings have been attributable to higher than anticipated field expenditures and effective tax rate of 35%.