KARACHI: The oil marketing companies (OMCs) sector recorded a 39 per cent increase in earnings during the first half of the current fiscal year, reaching Rs18.2 billion compared to Rs13.2 billion in the same period last year.

According to a report by Arif Habib Limited (AHL), sector-wide sales declined by 11 per cent year-on-year (YoY) to Rs2,081.5 billion in the first six months of the fiscal year, primarily due to a reduction in retail prices of motor spirit (MS) and high-speed diesel (HSD) by 10 per cent and 9.0 per cent YoY, respectively.

Hi-Tech Lubricants Limited (HTL) saw a robust 41 per cent YoY increase in revenue from its lubricants segment during July-December. Meanwhile, Pakistan State Oil’s (PSO) revenue contribution from re-gasified liquefied natural gas (RLNG) grew by 5.0 per cent YoY, driven by an 11 per cent YoY rise in volumes, with 55 cargoes handled during the period under review compared to 49 cargoes in the same period last fiscal year.

The sector’s gross margins stood at 3.4 per cent in the period, slightly lower than 3.5 per cent in the corresponding period last year, primarily due to lower ex-refinery prices, which resulted in inventory losses as opposed to gains in the same period of the previous fiscal year.

Finance costs declined by 22 per cent YoY due to lower interest rates and a significant reduction in short-term borrowings by PSO and HTL. The sector’s effective tax rate stood at 53 per cent during the period under review, compared to 67 per cent in the same period last fiscal year.

PSO’s market share in petroleum sales shrank to 41 per cent in February 2025 and 45 per cent in the first eight months of the current fiscal year, compared to 51 per cent in February 2024 and 50 per cent in July-February FY24. In contrast, Gas & Oil Pakistan Ltd’s market share surged to 13 per cent in February 2025 and 10 per cent over the first eight months of the fiscal year, up from 3.0 per cent in both February 2024 and the corresponding eight-month period of FY24.

Given the declining trend in international oil prices, the report indicated that petroleum prices are expected to decrease further in the ongoing and upcoming quarters. The government is evaluating measures to address the circular debt issue and is also expected to revise OMC margins soon, which could enhance sector earnings. Improving macroeconomic conditions have driven a rise in consumer car financing, boosting demand for petroleum products. Further declines in MS and HSD prices are expected to sustain this demand, the report noted.