Narowal plant helps HUBCO profits grow

Power producer reports 49% growth in profitability in 9MFY13 .

KARACHI:

The Hub Power Company announced its financial results for the nine-month period of fiscal 2013 on Thursday, posting a profit 49% to Rs7.4 billion compared to Rs4.97 billion in the corresponding period of last year.

Hubco is engaged in the electric utilities industry. The company owns an oil-fired power station with an installed net capacity of 1,200 megawatts (MW) at Mouza Kund, Hub, in Balochistan; and a 225MW capacity oil-fired power station at Mouza Poong, Narowal, in Punjab. The company also has a 75% controlling interest in Laraib Energy, a subsidiary that is developing an 84MW hydel power plant.

Topline Securities analyst Nauman Khan believes that earnings growth in the nine-month period primarily stems from commissioning of the Narowal project.

Moreover, another factor, he said, that played its role in growth of profits was the “U-shaped” based return while higher indexation factor – rupee depreciation and inflation.

In the first quarter of fiscal 2013, Ayaz Ahmed of Global Securities says that Hubco’s main plant propelled the earnings, which he expects to operate at a load factor of 78.4% (2,302 gigawatt hours), where Narowal’s utilisation remained subdued at 27% (128 GwH) due to piled-up receivables of Rs19 billion, which has partly rendered the plant un-operational.

Revenues improved to Rs132.49 billion in the nine-month period, gross margins improved 100 basis points to 9.6% and finance costs shrunk to Rs5.04 billion during the period under review.

Published in The Express Tribune, April 26^th, 2013.

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