HUBC reports 15% drop in profits due to lower income from associates

August 25, 2022 (MLN): The Hub Power Company Limited (HUBC) on Thursday, reported a 15% YoY decline in its net profit for FY22 to Rs29.5 billion from Rs34.8bn, owing to a whopping increase in operating costs and a lower share of profit from associates and joint ventures.

This was reflected in the company’s earnings per share which went down to Rs21.95 from Rs25.97 in the corresponding period last year.

According to the financial statement issued to the bourse, HUBC’s consolidated turnover in FY22 was up by a significant 77.8% YoY to Rs97.15bn owing to an increase in dispatches to 2,500 GWh and Furnace Oil prices.

However, the gross margin of the company went down to 34% from 60% a year earlier, mainly due to a massive rise in the operating cost by 2.9x YoY led higher load factor during the year.

The consolidated earnings also suffered from a 40% YoY decline in the share of profits from associates and joint ventures due to a loss of Rs1.4bn during 2QFY22 amid recognition of impairment loss (Rs1.99bn) on CPHGC’s equipment that was damaged during 1QFY22, a report by Arif Habib Limited said.

On the other hand, the other income increased by 2.7x YoY to Rs2.12bn during FY22 due to higher income from management services.

During the period, financial charges jumped by 8% YoY due to a higher interest rate. In FY21, the company saw a decline in financial charges due to lower short-term borrowings after receiving of 2nd settlement tranche of outstanding receivables.

Another blow to the earnings came from 8% YoY increase in taxes to Rs5.5bn compared to Rs5bn in FY21. Accordingly, the effective tax rate of the company clocked in at 16% against 13% last year.

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