DESCO didn't announce dividends for first time. It rings alarm
Operating loss coupled with interest payments against foreign debts led to a substantial increase in year-on-year loss
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The state-run Dhaka Electric Supply Company (DESCO) is not going to give any dividend to shareholders for the just concluded fiscal year for the first time since its 2026 listing.
The primary reasons are operating loss and foreign debt burden. The company's retained earnings also turned negative in the reporting year.
It has shown a loss of Tk 5.05 billion for FY24, slightly less than the loss of Tk 5.41 billion in FY23.
In a filing posted on the websites of both the stock exchanges on Tuesday, DSECO informed investors that the board could not recommend any dividend because of the negative income and negative retained earnings.
The company was listed in 2006 and issued cash dividends and/or stocks between 5 per cent and 30 per cent until FY23.
It, however, saw a 6.55 per cent year-on-year decline in loss in FY24, as the distribution revenue rose marginally. Moreover, foreign exchange fluctuation loss fell in FY24, compared to the year before.
Preferring anonymity, a senior official of DESCO said its retained earnings had already been exhausted because the fund had been used up to continue operations.
"It would be tough to continue operations further unless the government provides support," he said.
DESCO had to purchase power at a rate of Tk 10.856 per kilowatt and sold the units at a rate of Tk 10.298.
The operating loss coupled with interest payments against foreign debts led to a substantial increase in loss in FY24 from the year before.
DESCO has foreign loans worth around Tk 30 billion, including debts from the Asian Development Bank, Japan International Cooperation Agency, and Asian Infrastructure Investment Bank.
The official said the power supplier had to purchase dollars at a rate of Tk 84 to Tk 110 in FY23, which jumped to Tk 110-Tk 118 in FY24. Hence, the company's foreign exchange fluctuation loss dropped a bit, which slightly helped the company to reduce the yearly loss.
DESCO experienced a loss of Tk 5.41 billion in FY23 for the first time for the same reasons.
Later, it continued reporting losses for all quarters of FY24. For the first quarter (Q1) of the fiscal year, the company reported a loss of Tk 3.82 per share. The loss was Tk 1.10 per share in the Q2, and Tk 1.89 per share in the Q3.
The share price of DESCO has been on a downward spiral since August 29 this year and closed at Tk 22.50 per share on the Dhaka Stock Exchange on Tuesday.