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United Power Generation & Distribution Company's profit jumped 25 per cent year-on-year to Tk 3.17 billion in the third quarter through March this year, supported by stability in the forex market and a higher finance income.
Accordingly, its consolidated earnings per share (EPS) rose to Tk 5.39 in the quarter from Tk 4.28 in the same period a year before, according to its un-audited financial statements published on Thursday.
The country's first commercially independent power generator's revenue, however, dropped 14 per cent year-on-year to Tk 7.42 billion due to lower demand for electricity, placed by the government, particularly from its oil-fired power plants.
"Net profit increased in the January-March quarter due mainly to higher finance income, stability in foreign exchange rates and reduction in administrative costs," said Mostak Ahmmed, chief financial officer (CFO) of the United Power.
The company's finance income [interest on related party loan and interest on short-term bank deposits] almost doubled year-on-year to Tk 165 million in the January-March quarter for rising interest rates.
Mr Ahmmed said the company's revenue earnings from profit-making natural gas-run power plants increased year-on-year during the quarter while the government demand from heavy fuel oil (HFO)-run plants declined.
Bangladesh is currently going through an energy transition by way of reducing dependence on petroleum products of both diesel and furnace oil to generate electricity.
"The stability in the foreign exchange rates also helped the company secure a higher profit in the quarter," said the CFO.
The United Power managed to gain Tk 208 million from foreign currency transactions in the third quarter through March of FY24 as against a loss of Tk 448 million in the same quarter a year earlier.
The CFO said the company had forecast that foreign transactions would be settled at Tk 123 a dollar in the January-March quarter and set aside money accordingly. However, finally it could settle import bills at Tk 118 a dollar as the local currency gained some sort of stability against the dollar, which led to the gain in overseas payments.
Moreover, electricity generation costs slid during the quarter, compared to the same quarter of the previous year, 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 4.07 billion, which was nearly 55 per cent of total revenue in January-March this year, down from 62 per cent of the revenue in the same quarter of the previous year.
Listed in 2015, United Power is the 10th largest stock if market cap is considered. Its stock price jumped 4 per cent to Tk 127.8 per share on Thursday. It had plunged more than 45 per cent since the removal of floor in January this year.
Nine-month performance
United Power's nine-month profit dropped almost 7 per cent year-on-year to Tk 7.80 billion through March this year. The decline in profit was accompanied by a 16 per cent fall in revenue to Tk 26.19 billion during the time.
The company's exchange loss in foreign currency transactions jumped 28 per cent year-on-year to Tk 1.04 billion in the nine months through March this year, mainly due to losses in the first and the second quarters.
At the same time, borrowing cost escalated on the back of high interest rates, compared to the same period of the previous year, which impacted the profit.
The company's long-term debt burden fell 34 per cent year-on-year to Tk 887 million, but short-term debt rose 42 per cent to Tk 7.83 billion in the nine months through March, compared to the same period a year ago.
The company's capacity payment rose almost 12 per cent year-on-year to Tk 7.94 billion in the nine months while fuel & energy costs fell 26 per cent to Tk 13.58 billion in July-March of FY24.
Finance expenses contributed greatly to cash outflow. As a result, consolidated net operating cash flow per share declined sharply to Tk 7.65 at the end of March from Tk 13.07 a year ago.
Unlike all other private-sector power producers, two plants of United Power at the export processing zones of Dhaka and Chattogram can directly sell power to factories at a negotiated price, usually higher than what the government pays for supplying electricity to the national grid.