After a couple of tough months of efficiency slippages in summer this year, K Electric Limited (KSE: KEL) has got it all together once again with its financial performance beaming. KEL’s financial performance for FY15 shows that the firm continued with its journey towards earning improvement. FY15 saw an increase of over 100 percent in the firm’s bottom line year-on-year, and the primary reasons for the earnings improvement had been falling crude oil prices, and resultant costs.
1QFY16 financial performance is also reflective of the same lower input costs due to lower furnace oil prices amid softer crude oil prices. So while energy sales continued to grow at 10 percent year-on-year in 1QFY16, the tariff adjustment component of revenues dropped significantly by almost 60 percent year-on-year.
Despite a cut of eight percent year-on-year in the power company’s total revenues, KEL’s gross profit increased by 46 percent year-on-year, boosting the gross margins as well. This was largely due to lower input costs like that incurred in fuel and oil consumption, and electricity purchase. And while the generation, transmission and distribution costs saw an increase of 16 percent, year-on-year, it must be highlighted that the T&D losses have significantly come down from 35.9 percent in FY09 to 23.7 percent in FY15.
The power company touted an increase of more than double in its earnings for 1QFY16. Higher generation, improved recovery ratio, reduction in theft, and expanding consumer base, improvement in T&D losses, fuel savings and projects in the pipeline have been the key growth drivers for the firm.
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