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After reporting its highest-ever annual profit in FY25, United Power Generation & Distribution Company's first-quarter profit plunged 30 per cent year-on-year to Tk 2.92 billion in the three months to September, due to lower revenue and higher production costs.
The power generation company's consolidated earnings per share (EPS) came down to Tk 4.94 in the July-September quarter this year from Tk 7.13 in the same quarter of the previous year, according to its audited financial statements published on Sunday.
The company said in its earnings note that last year it recognised additional revenue - called supplemental revenue - stemming from a bulk electricity tariff adjustment linked to earlier gas price hikes, but this revenue did not recur this quarter.
As a result, the consolidated and separate earnings per share for Q1 of FY26 reflect only normal operating revenue, leading to a comparative decrease in profit, said the company.
The government in March last year raised the bulk electricity price by 5 per cent on average to Tk 7.04 per unit.
In April this year, the Bangladesh Energy Regulatory Commission (BERC) raised the gas price for new industries to Tk 40 per cubic meter from Tk 30 per cubic meter and for captive power plants to Tk 42 per cubic meter from Tk 31.50 per cubic meter.
Although the government raised the gas tariff, the electricity price has remained unchanged from last year. That has resulted in higher production costs, hitting both top-line and bottom-line growth.
The cost of sales, which includes all associated costs to produce power, stood at Tk 6.57 billion - 67 per cent of the total revenue - in July-September this year, up from 60 per cent in the same quarter last year.
Revenue from the sale of electricity dropped 14 per cent year-on-year to Tk 9.87 billion in the quarter to September this year.
United Power's major revenue income comes from the Bangladesh Power Development Board, which fell 18.6 per cent year-on-year to Tk 7.77 billion, while revenue from the Bangladesh Export Processing Zones Authority and the Bangladesh Rural Electrification Board increased 2 per cent and 193 per cent respectively.
Despite the quarterly profit decline, United Power stands out among its peers, driven by factors such as long-term power purchase agreements (PPAs) with its clients and increased revenue from key government establishments and export processing zones, industry insiders say.
"Due to its medium- to long-term power supply agreements, United Power benefits from a stable revenue stream with predictable cash flows," said EBL Securities in its equity analysis.
United Power operates eight power plants - six gas-fired and two heavy fuel oil-based - across the country, with a total production capacity of 895 megawatts.
It is the country's first commercially independent power producer (IPP) and the only power producer authorised by the Bangladesh Export Processing Zones Authority (BEPZA) to operate within Export Processing Zones (EPZs), giving it a unique, competition-free position.
Unlike other private power producers, two of United Power's plants in the export processing zones of Dhaka and Chattogram sell electricity directly to factories at negotiated prices.
"This exclusivity - coupled with long-term power purchase agreements (PPAs) and a stable industrial client base - distinguishes it from other IPPs exposed to demand volatility and shorter contract terms," said EBL Securities.
The company has a 30-year power supply agreement with BEPZA, extendable by another 30 years, while five of its power plants have power purchase deals signed with the Bangladesh Power Development Board for different tenures.
The consolidated net operating cash flow per share stood at Tk 6.62 in July-September this year, up from Tk 1.85 in the same period last year, mainly due to higher collection from customers.
The net asset value, which refers to the excess of total assets over total liabilities, reached Tk 78.83 per share as of September this year, up from Tk 73.89 in June.
Meanwhile, following the earnings disclosure, the stock of United Power closed at Tk 120.20 per share on Sunday, losing 1.64 per cent over the previous day on the Dhaka Stock Exchange, although the overall market closed higher.
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