KARACHI - Pakistan State Oil is likely to post robust earnings of Rs15.9 per share in the 1st Quarter of Fiscal Year 2010 versus loss of Rs48.9 per share in corresponding period last year. The turn around in earnings is primarily expected on the back of upbeat furnace oil sales and inventory gains. It was observed that last year the company suffered losses due to huge inventory and exchange losses, however, an interim dividend of Rs5-6 with the result is expected. Moreover, during 1QFY10, the company sold 2.2mn tons of furnace oil (FO) compared to 1.7mn tons last year, up 31 percent Year on Year basis. The surge is attributed to rising demand from existing dual and oil fired power plants. The company has met 89 percent of the countrys FO demand. Besides, impressive FO sales, the company is likely to incur pre-tax inventory gains of Rs2.2bn (assuming 10 days of inventory levels), due to 20-22 percent increase in major oil product prices during the period. However, PSO is to post profit of Rs2.7bn (EPS Rs15.9) during 1QFY10 as compared to a loss of Rs8.4bn (loss per share of Rs48.9) in the same quarter last year. The turn around in earnings is expected mainly due to robust furnace oil sales and huge inventory gains. The gross profit is likely to reach at Rs7.7bn versus gross loss of Rs7.4bn last year. However, higher financial charges are expected to partially dilute the impact of huge inventory gains. Last year, the bottom-line suffered due to huge inventory losses and exchange losses. The company reported inventory losses of Rs14.5bn while exchange losses arrived at approximately Rs3bn. Farhan Mehmood at JS research when contacted said that the recent increase in power tariff is likely to ensure timely payments by Wapda, however, energy companies still owe more than Rs75bn to the company which is a concern despite the fact that the government has recently issued TFCs worth Rs82bn.