KAPCO’s profit surges 2.6 times to Rs5.88b

Increase comes mainly due to income from other than core business

KARACHI: Kot Addu Power Company Limited’s (Kapco) profit surged 2.6-fold to Rs5.88 billion in the quarter ended December 31, 2018 mainly due to realisation of income from other than the core business of power sales.

The independent power producer (IPP) had recorded a profit of Rs2.21 billion in the same quarter of previous year. Its earnings per share (EPS) stood at Rs6.68 in the Oct-Dec 2018 quarter compared to Rs2.52 in the same quarter of last year, the company said in a notice sent to the Pakistan Stock Exchange (PSX).

Kapco’s share price hit the lower limit of 5%, or down Rs2.59, to close at Rs24.2 with trading in 2.27 million shares at the PSX. Kapco earned the handsome profit “due to rupee devaluation and massive other income”, Taurus Securities stated in post-result comments. “In a negative surprise, the company skipped its expected biannual dividend payout due to the worsening circular debt situation in the energy sector,” it said. “This is explained by similar cuts in dividends by other IPPs (Hubco, Nishat Power and Nishat Chunian Power), amid liquidity constraints.”

Net sales were reported at Rs12.6 billion in the quarter, down 31.6% year-on-year due to a fall in power generation amid the winter season. “Power generation was expected to have declined 65.9% in the said quarter.”

“Other income surged to Rs7.3 billion, much higher than our expectation, likely due to a huge rise in true-up income and higher penal income,” the brokerage house said.

In first half (Jul-Dec) of financial year 2019, net earnings came in at Rs9 billion (earnings per share of Rs10.22) mainly due to the rupee devaluation and a significant jump in other income. However, finance cost surged 42.7% in the half year due to a rise in interest rate and borrowings, it said. 

Published in The Express Tribune, February 21^st, 2019.

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