High operating cost drives down Hubco’s earnings

Power producer makes profit of Rs2.54b, down 4%

KARACHI: Hub Power Company’s (Hubco) consolidated profit dropped 4% to Rs2.54 billion in the quarter ended September 2017 primarily due to higher operating costs, according to a bourse filing on Monday.

The company had registered earnings of Rs2.65 billion in the corresponding quarter of previous year. Earnings per share came down to Rs2.06 from Rs2.13, according to the company’s profit and loss account available with the Pakistan Stock Exchange (PSX).

The independent power producer also announced a cash dividend of Rs1.5 per share for the shareholders whose names will appear in the register of books on December 4, 2017. Its stock price fell 3.25%, or Rs3.51, to Rs104.33 with a volume of 890,100 shares at the PSX.



Topline Securities said in post-result comments operating expenses were driven up by higher operation and maintenance (O&M) expenditure related to Hubco’s Narowal plant.

“O&M of 8 out of 11 engines of Narowal was carried out in fiscal year 2017 and (that of) 3 engines is due in fiscal year 2018. Given the higher O&M, the company in the first quarter of FY18 has initiated overhaul of three engines of Narowal, we believe,” it said.

On the flip side, Hubco’s sales surged 14.5% to Rs27.33 billion in Jul-Sep 2017 from Rs23.87 billion in the corresponding period of previous year.

“This was mainly due to higher furnace oil prices, up 26% year-on-year, on the back of rising international crude oil prices. Generation (remained) flat at 2,197 GWh in the outgoing quarter,” Topline said.



The company recorded gross margins at 15%, down 173 basis points year-on-year, which was attributable to higher operation and maintenance expenses.

Administrative and general expenses rose significantly by 37% year-on-year. Finance cost edged up 1% to Rs1 billion, following more reliance on short-term borrowings due to higher receivables.

Published in The Express Tribune, October 31^st, 2017.

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