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.

Financial Results for the nine months ended March 31, 2020 ('000 Rupees)

 

Mar-20

Mar-19

% Change

REVENUE

 

 

 

Sale of energy-net

 144,353,814

 129,750,256

11.26%

Tariff adjustment

 76,983,864

 70,248,477

9.59%

 

 221,337,678

 199,998,733

10.67%

COST OF SALES

 

 

 

Purchase of electricity

 (77,069,307)

 (67,890,082)

13.52%

Consumption of fuel and oil

 (88,339,412)

 (81,966,973)

7.77%

Expenses incurred in generation, transmission and distribution

 (18,940,928)

 (16,675,852)

13.58%

 

 (184,349,647)

 (166,532,907)

10.70%

GROSS PROFIT

 36,988,031

 33,465,826

10.52%

Consumer services and administrative expenses

 (15,910,328)

 (14,242,401)

11.71%

Impairment loss against trade debts

 (7,610,937)

 (9,775,348)

-22.14%

Other operating expenses

 (919,339)

 (2,441,516)

-62.35%

Other income

 6,472,435

 4,301,040

50.49%

PROFIT BEFORE FINANCE COST

 19,019,862

 11,307,601

68.20%

Finance cost

 (12,821,139)

 (4,538,649)

182.49%

PROFIT BEFORE TAXATION

 6,198,723

 6,768,952

-8.42%

Taxation

 

 

 

current

 (2,198,123)

 (1,066,445)

106.12%

deferred

 (408,638)

 –

 

PROFIT AFTER TAXATION

 3,591,962

 5,702,507

-37.01%

EARNINGS PER SHARE-Basic and diluted

 0.13

 0.21

-38.10%

 

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Posted on: 2020-10-28T11:56:00+05:00

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