KARACHI: Pakistan State Oil posted a striking contradiction in its annual results Friday: group profit surged past Rs31.5 billion for the year ended June 30, 2026, up 122% from a year earlier, while the company's cash and cash equivalents fell from Rs106.92 billion at the start of the year to Rs19.03 billion at year-end, a decline of roughly 82%. The earnings statement shows a breakthrough. The cash-flow statement tells a much tougher story. The board approved a final cash dividend of Rs10 per share, a full 100%.

PSO Profit Tells Two Stories

Put the two profit numbers side by side and things get stranger. Standalone, PSO's own profit actually fell down to Rs16.07 billion from Rs20.9 billion, a drop near 23%. Earnings per share on that basis slid too, from Rs44.54 to Rs32.10. Fold in the subsidiaries, though, and the picture flips. Group profit more than doubled. Non-controlling interest, the slice belonging to minority shareholders in PSO's subsidiaries went from a Rs2.2 billion loss to a Rs6.1 billion gain. The sharp divergence between standalone and consolidated earnings suggests that group-level operations played a much bigger role in PSO's FY26 profitability than the parent company's own performance did.

Net sales don't match the profit story either. Revenue actually declined, both standalone and consolidated, down roughly 3% at group level, to just over Rs3.2 trillion. Lower sales. Higher profit. Usually that means margins widened, and here they clearly did: consolidated gross profit jumped from Rs97.15 billion to Rs133.25 billion, up 37%, even with the top line shrinking.

Operating cash flow didn't just soften it flipped negative. PSO recorded Rs61.59 billion in net cash used in operating activities on a consolidated basis. A year earlier it generated Rs152.90 billion. That's a swing of more than Rs214 billion in the wrong direction, in a single year, alongside a profit figure that more than doubled.

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Taxes paid climbed to Rs54.5 billion consolidated, up from Rs39.8 billion. Finance costs paid hit Rs25.5 billion. Other receivables climbed to Rs203.95 billion from Rs169.35 billion, adding another notable movement on the balance sheet. None of this is unusual for an oil marketing company in Pakistan's energy sector, where payment delays across the supply chain are a familiar feature. But the scale of this year's cash movement, next to a profit figure that looks strong on paper, raises an obvious question about how the two numbers square with each other.

Dividend Adds Another Twist

The dividend adds another layer to the numbers. PSO's board recommended Rs10 per share, or 100%, where it reported a steep year-on-year deterioration in cash generation. The filing does not explain the relationship between the payout decision and the cash-flow movement. That leaves investors with an unusual FY26 picture: dramatically stronger consolidated earnings, weaker standalone profit, and a cash-flow statement moving sharply in the opposite direction.