HUBC’s profitability weakens by 9% in 1QFY22

October 29, 2021 (MLN):  Hub Power Company Limited (HUBC), one of the first and largest independent power producers (IPP) of Pakistan, witnessed a 9% YoY decline in its consolidated net profits that stood at Rs7.70 billion (EPS: Rs5.72) during the first quarter ended September 30, 2021, against the net profits of Rs8.44bn (EPS: Rs6.28) earned in the same period last fiscal year.

This fall in profitability was mainly due to the higher operating expenses that led margins to plunge by 22ppt to 30% during 1QFY22.

On a consolidated basis, HUBC achieved a turnover of Rs26.34bn which is nearly 67% higher on the back of higher dispatches from both Narowal and HUBC’s base plant but, Laraib (Hydropower plant) operated at a weak load factor, a research note by Intermarket Securities said.

However, the gross margins of the company contracted from 52% to 30% in 1QFY22 due to an over two-fold jump in operating cost.

A reduction in general and administrative expenses by 42% YoY, a 12.8% YoY drop in finance cost amid a lower interest rate regime and an increase in other income by 3.77 times YoY supported the bottom-line.

More notably, the share of profit from associates clocked in at Rs2.29bn, down by 34% as opposed to Rs3.48bn earned in the same period last year.

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