Hubco’s profit declines 42% to Rs5 billion

Hub Power Company registered a 42% drop in its profit that reached Rs5 billion in the quarter ended December 31, 2021 primarily due to a hefty loss suffered by an associate firm.

According to a notice sent to the Pakistan Stock Exchange on Tuesday, the energy company had posted a profit of Rs8.45 billion in the same period of 2020.

Earnings per share of the firm fell from Rs6.32 during October-December 2020 to Rs3.7 in October-December 2021.

“Along with the result, the company did not announce any interim cash dividend,” said Topline Securities analyst Sunny Kumar. “The earnings were lower-than-industry expectations due to the loss recorded on account of share of an associate, namely China Power Hub Generation Company (CPHGC), we believe.”

To recall, one unit (660 megawatts) of CPHGC has not been functioning since July 2021 after a lightning strike damaged the transformer, it said.

Net sales of the company soared from Rs11 billion in the October-December quarter of 2020 to Rs19.9 billion in the corresponding three months of 2021, an increase of 81%.

“Turnover increased amid a rise in dispatches from the Hub base plant and Narowal plant and higher furnace oil prices,” Kumar said.

Arif Habib Limited analyst Rao Aamir Ali said that during the Oct-Dec 2021 quarter, gross margins of the company decreased 30 percentage points year-on-year to 40%.

The decline in margins was mainly attributable to the higher load factor during the quarter, he said.

Operating cost of the firm spiked 266% to Rs11.9 billion. The company had recorded a cost of Rs3.3 billion under the same head in the corresponding period of 2020.

On the other hand, general and administrative expenses fell 36% as they dipped from Rs366.2 million in October-December 2020 to Rs233.1 million in the period under review.

Published in The Express Tribune, February 16^th, 2022.

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