Higher finance cost dents KEL’s profitability

October 28, 2020 (MLN): K-Electric Limited (KEL), the sole electricity provider to Karachi, has announced its financial results for the nine months ended on March 31, 2020, wherein the company has posted net profits of Rs 3.591 billion i.e. around 37% lower than the net profits of Rs 5.70 billion earned in the corresponding period of last year.

This has translated into earnings per share which decreased by 38% YoY from Rs 0.21per share to Rs 0.13 per share.

As per the financial statement issued by the company, the decline in the company’s profitability was attributable to higher finance cost.

During the period under review, the revenue of KEL improved by 10.67% YoY on the back of an increase in tariff adjustment along with the sale of energy while its cost of sales also showed a growth of 10.7% YoY, accordingly, the gross profit of the company increased by 10.5% YoY to Rs 36 billion. Besides, the gross margin remained flat at 17% during 9MFY20.

Some of the positive highlights include a 22% YoY decrease in impairment loss against trade debts and a 62% YoY decline in other operating expenses while other income of the company surged by 50.5% YoY to Rs 6.47 billion.

The major culprit behind the red bottom line was colossal finance cost which ballooned by 2.8 times YoY to Rs 12.82 billion.

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