Business

Hub Power’s earnings grow 8% to Rs3.3b

High finance cost due to rupee depreciation dilutes profit

Our Correspondent May 01, 2019 1 min read

PHOTO: AFP

KARACHI: Hub Power Company’s profit grew 8% to Rs3.3 billion in the quarter ended March 31, 2019, according to a notification sent to the Pakistan Stock Exchange.

The company had reported a profit of Rs3.1 billion in the corresponding quarter of previous year.

Earnings per share (EPS) of the company stood at Rs2.73 in the Jan-Mar 2019 quarter compared with Rs2.58 in the same quarter of 2018. The power generation company reported a turnover of Rs13.4 billion in the quarter under review, which was 33% lower than Rs19.5 billion in the same quarter of previous year.

“The company does not intend to give dividend as it is planning to expand,” said a market expert on condition of anonymity. “The company saw a decline in sales due to low dispatches of furnace oil.”

The government is discouraging furnace oil as coal power plants are being built, which, along with hydel plants, will meet electricity needs of the country. Furnace oil generates costly electricity.

Gross profit of the company amounted to Rs6 billion in the Jan-Mar 2019 quarter against Rs4.6 billion in the same period of 2018, an increase of 29.5%. Finance cost soared 83% to Rs2 billion in the quarter under review against Rs1.1 billion in the same period of 2018.

“Finance costs increased because the company had borrowed to finance its expansion plans,” the expert said. “Gross profit of the company shows growth but finance costs grew by a higher proportion due to rupee depreciation against the dollar, thus the profit diluted.”

The company has taken a debt of Rs26 billion as it planned expansion in joint ventures with different companies. It owns 46% equity in the 320MW power plant with China Power Hub Generation Company. It also has 60% share in the 330MW plant of Thar Energy Limited. It has shareholding in the 330MW ThalNova project as well. The company issued 12% right shares recently.

For nine months ended March 31, 2019, the company recorded a net profit of Rs9 billion against Rs8.6 billion in the same period of 2018, posting a growth of 4.2%.

Earnings per share (EPS) stood at Rs7.41 in the nine-month period against Rs7.15 in the corresponding period of 2018.

Published in The Express Tribune, May 1^st, 2019.

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