Engro Powergen Qadirpur Limited (PSX: EPQL) announced its financial performance for the first quarter of CY23 yesterday with a jump in earnings of 33 percent year-on-year. However, the rise in earnings did not come from growth in revenues. This can be seen from the slide in sales of around nine percent year-on-year amid subdued power demand due to weak economic activity as well as winter season consumption decline.
The company’s gross profits for 1QCY24 were seen slipping by 5.6 percent year-on-year primarily due to the lower period weighting factor applicable on capacity payments during the period versus a similar period last year. This trend of low period weighting factor continues from the 4QCY23, which affected that quarter’s gross profit too.
The actual growth in the power company’s earnings in 1QCY24 came from an over eight times rise in finance income, which was higher than what the market was anticipating. This rise in finance income is likely due to higher penal income and lower finance cost for the period.
EPQL witnessed a slight decline in sales revenue amid weak power demand in the country due to the current macroeconomic challenges including inflation, power prices hikes and lower economic growth. But due to its cheaper generation, the company is expected to continue to receive dispatch from the power purchaser. The upcoming summer season will improve the dispatches; the Lower topline was also accompanied by no dividend payment during the quarter. This comes after three-quarters of CY23 with dividend payouts. The market believes that no dividend during 1QCY24 was due to cash constraints.
EPQL is actively exploring alternate and sustainable local fuel options the gas supply from Qadirpur gas field is depleting, and the company has made its plant available in mixed mode on both gas and diesel. In 2023, NEPRA approved the company for the modification in Generation License to include gas supplied by PEL. EPQL is currently engaged with PEL for supply of 8–13 mmscfd gas from a field operated by PEL.
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