ISLAMABAD: Hub Power Company reported an after-tax profit of Rs2.8 billion or Rs2.38 per share for the quarter ended December 31, 2015, down 10.5% compared with Rs3.2 billion or Rs2.66 per share it earned in the same quarter of 2014.
According to a notification sent to the Pakistan Stock Exchange on Wednesday, the Karachi-based power generation company also announced an interim cash dividend of Rs4.5 per share for the quarter under review.
Following the result announcement, the stock, which ended at Rs103.7 per share the previous day, decreased by Rs0.78 or 0.75% to close at Rs102.92 per share on Wednesday with more than 2 million shares changing hands.
The result was in line with market expectations, according to Topline Securities, which attributed the fall in the company’s net earnings to a decline in its sales - the company’s revenues clocked in at Rs23.3 billion during October-December period, down 31% when compared with Rs33.8 billion of the corresponding period of 2014.
The recent slump in international crude oil prices resulted in a decline in furnace oil prices, Topline Securities said, explaining the fall in the company’s volumes during the quarter under review. Average furnace oil prices were 46% in the fourth quarter of 2015 when compared with that of the corresponding period of 2014.
Gross profit for the quarter improved by 3.7 percentage points to 18.5%, the report said. “The improvement can be attributed to normalisation of Operation & Maintenance (O&M) expense as overhaul of two boilers was carried out last year,” it said, adding the company has taken over O&M activities of its base plant at Hub through Hub Power Services Ltd (HSPL), a wholly owned subsidiary of the company.
However, the company’s finance cost declined by 33% on year-on-year basis to Rs2.1 billion during July-December period, BMA Capital said in its report.
It added that the lower finance cost is a factor of improved liquidity position of the company amid decline in furnace oil prices and subsequent improvement in the circular debt position and lower interest rate in the country.
On quarter-over-quarter basis, the company’s top-line declined by 13.5% while gross profit margins improved by 2 percentage points, Topline said in its report, adding they expect value addition from coal-based power plants being set up by the company at existing Hub plant site and investment in Sindh Engro Coal Mining Corporation (SECMC), which will be key catalysts to the company’s earnings going forward.
Published in The Express Tribune, February 18th, 2016.
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