United Power secures higher profit after bulk electricity tariff hike

United Power Generation & Distribution Company secured a 5 per cent year-on-year growth in profit to Tk 2.92 billion in the second quarter of FY25, driven by higher revenue amid bulk power tariff hike.

The power generation company's consolidated earnings per share (EPS) stood at Tk 4.98 in the second quarter, up from Tk 4.71 in the same quarter a year ago, according to its un-audited financial statements.

"A rise in bulk tariffs for electricity, stable production levels and consistent foreign exchange rates, compared to the same period last year, contributed to higher profit," said the company in its earnings note.

The government in March last year raised the bulk electricity price by 5 per cent on an average to Tk 7.04 per unit.

United Power's sales of electricity grew 12 per cent year-on-year to Tk 9.50 billion in the quarter to December.

The company's half-yearly profit also jumped 54 per cent year-on-year to Tk 7.11 billion while electricity sales rose 12 per cent to Tk 21.01 billion in the six months through December last year.

United Power is the country's first commercially independent power producer. It supplies power to Bangladesh Export Processing Zones, Bangladesh Rural Electrification Board, Bangladesh Power Development Board, and private customers.

Its revenue from Bangladesh Export Processing Zones, Bangladesh Rural Electrification Board, and Bangladesh Power Development Board increased 48 per cent, 67 per cent and 7 per cent respectively in July-December last year, compared to the same period of the previous year.

However, revenue from private customers dropped 2.8 per cent year-on-year in the three months to September.

Unlike other private power producers, two plants of United Power at the export processing zones of Dhaka and Chattogram directly sell power to factories at a negotiated price.

Another factor that boosted profits was a reduction in finance expenses after partial clearance of high-cost loans. Finance expenses fell remarkably by 81 per cent year-on-year to Tk 30.4 million in July-December last year.

United Power's total debts [long-term & short-term] came down to Tk 3.58 billion at the end of December last year from Tk 4.82 billion in June 2024.

Meanwhile, the dollar-taka exchange rates have remained almost stable, oscillating between Tk 120 and Tk 123 since the ouster of the Hasina-led government. Policy measures taken by the Bangladesh Bank narrowed the exchange rate gap between formal and kerb markets.

Subsequently, United Power's exchange loss in foreign currency transactions in July-December last year was Tk 238 million, a slight increase from Tk 196 million in the same period the year before.

Lower power generation cost also helped the company secure a higher profit. Electricity generation costs slid due to the price fall of furnace oil in the global market.

The cost of sales, which includes all associated costs to produce power, stood at Tk 13.41 billion, 64 per cent of total revenue earned in July-December last year, down from 68 per cent of the revenue in the same period the year before.

The consolidated net operating cash flow per share, a measure of a company's ability to generate cash from its operations, also rose to Tk 7.55 in the first half of FY25 from Tk 2.74 in the same period of FY24.

The company explained that cash flow had increased due to the increase in collection of receivables from customers.

The net asset value, which refers to the excess of total assets over total liabilities, reached Tk 65.34 per share as of December, up from Tk 59.23 in June last year.

Despite the higher profit, the stock dropped 1.86 per cent to Tk 120.8 per share on Sunday on the Dhaka Stock Exchange.

Annual Financial Performance

United Power's annual profit rose 1.25 per cent year-on-year to Tk 8.12 billion in FY24 while revenue dropped 16 per cent year-on-year to Tk 34.78 billion in the year.

The company paid 60 per cent cash dividends for FY24, down from 80 per cent cash dividends paid for the year before.

[email protected]