Corporate results: HUBCO’s profit down 30%

Company records net income of Rs6.5 billion against Rs9.387 billion it posted in 2012-13.

KARACHI:

Hub Power Company (Hubco) has announced a 30.2% decline in the net profit for fiscal year 2013-14 compared with the previous year as it operated below its actual potential due to the on-going overhaul of plants’ boilers.

In a notice posted on the Karachi Stock Exchange website, Hubco, the largest private power supplier in Pakistan, communicated that its profit for 2013-14 was Rs6.549 billion against Rs9.387 it posted in 2012-13.

It announced a final cash dividend of Rs4 per share that is in addition to Rs2.5 per share already notified earlier in the year.

Sales were down 2% to Rs161.81 billion while gross profit dropped 28% to Rs11.7 billion indicating the impact of less power generation on the returns of the company.

“Company’s load factor for base plant stood at 67.4% versus 72.4% in the same period of last year. However, load factor of its Narowal plant stood at 83.3% as against 45.1% in fiscal 2013,” Vahaj Ahmed, analyst at Topline Securities, said in a report.

Hubco also owns Narowal plant in Punjab with a capacity of 225 Megawatts (MW) and another 84MW-hydroelectric project in Azad Kashmir.

The overhaul work has forced Hubco to cut production, which has also affected its earnings. The four power units with 325MW capacity each (1300MW total) are being operated at a lower load factor.

The company expects to complete the overhaul work by the end of May 2015, CEO Khalid Mansoor told The Express Tribune. “The work on two of the boilers has already been completed but all four of them have been working.”

Overhaul of the third boiler will start in November 2014 and will be completed by January 2015 before company moves on to fix the last boiler, he said.

The company has been carrying out repair and maintenance of the boilers of its four power plants for a couple of months in a bid to increase productivity.

Analysts say the repair of the boilers was long overdue; something which the previous sponsors kept delaying as they sought an exit from the investment. Hubco was sold by foreign investors to the Dawood Group in 2012.

Published in The Express Tribune, August 20^th, 2014.

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