The Hub Power Company Limited (PSX: HUBC) announced its consolidated 9MFY17 result yesterday which saw lacklustre performance by the company in its bottom-line. Even though the top line of the firm saw an increase in revenue yet a more than proportionate increase in operating costs led the gross profit to decline by 6 percent. The major reason behind this was the overhauling expenditure at HUBCO’s Narowal plant which led to a higher operating expenditure as compared to the previous year.
The company’s finance cost saw a marginal decrease of 2 percent whereas the share of loss from associates went down by 95 percent. Resultantly, the company posted a decline of 7 percent in its profit for the period with an EPS of Rs6.59 (9MFY16: Rs7.21). The gross margin fell by more than 2 percent whereas the net margin saw a decrease of almost 1.5 percent as compared to the previous year.
The company also announced an interim cash dividend of Rs2 per share (20%) making total payout for 9MFY17 Rs5 per share. HUBCO reported earnings from Narowal as discontinued operations following the approval of de-merger of the plant into HUBC’s wholly owned subsidiary Narowal Energy Limited.
It should be noted that the majority of IPPs are facing liquidity crunch because of rising circular debt which has also affected HUBCO. Future prospects for the company include setting up a 330MW mine mouth coal power plant at Thar with China Machinery and Engineering Corporation (CMEC) and a 1320MW coal plant at Hub.
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