Hubco’s profit slides to Rs5.37b on lower sale of electricity

Earnings per share slipped to Rs4.38 during July-December, down 4%

KARACHI: Hub Power Company Limited’s consolidated net profit dropped almost 4% to Rs5.37 billion in the half-year ended December 31, 2016 due to lower sale of electricity, according to a bourse filing Monday.

The company had booked a profit of Rs5.57 billion in the same half of the previous year, the company reported to the Pakistan Stock Exchange.

Earnings per share slipped to Rs4.38 from Rs4.59 in the corresponding period.

Board of directors recommended an interim cash dividend at Rs1.50 per share. This will be paid to the shareholders whose name will appear in the register of members on April 6, 2017. The entitlement is in addition to the previous interim dividend already paid at Rs1.50 per share.

Hubco’s share price fell 2.03% or Rs2.78 and closed at Rs133.75 with a volume of 638,800 shares at the Exchange.

According to the profit and loss accounts of the company, turnover (sales) also decreased 4% to Rs48.22 billion in the half from Rs50.28 billion in the corresponding period.

Mehwish Zafar, an analyst at JS Global Research, said the “decline in turnover primarily stemmed from lower power dispatches (reducing 5% year-on-year basis to 4,323GWh).”

The decline in turnover is noted “despite 9% year-on-year recovery in furnace oil prices [which is positive for the company’s turnover],” she said.

Resultantly, gross profitability shrank 7% to Rs8.17 billion in spite of 3% reduction in Cost of Sales, she added.

The finance costs recorded at Rs2.06 billion in the half as compared to Rs2.14 billion in the corresponding period. Share of loss from associates increased to Rs99.03 million from Rs52.97 million. The taxation on profit doubled to Rs109.80 million from Rs52.76 million.

In the quarter ended December 31, 2016 the independent power producer posted 5% lower gross profit to Rs4.11 billion, “mainly on the back of higher O&M [operation and maintenance] expenditures (explained by on-going overhauling activity at Narowal plant),” the analyst added.

Hashim Sohail, an analyst at Topline Securities, said they expect, going forward, value addition from coal-based power plants (1,320MW at existing Hub plant site and 330MW at Thar) and investment in Sindh Engro Coal Mining Corporation as key catalysts to company’s earnings.

Published in The Express Tribune, February 21^st, 2017.

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