HUBC’s (Hub Power Company Limited) performance in 1HFY26 reflects a transition phase for the company where lower revenues from legacy power assets were largely offset by strong income from associates, lower financing costs, and improved profitability at the operational level.
On a consolidated basis, revenue declined sharply by around 28 percent year-on-year. The decline was mainly due to the early termination of the Hub Plant PPA and the renegotiation of Narowal Energy Limited’s tariff structure, which significantly reduced the company’s topline contribution from its core generation assets. As a result, gross profit also fell by 39 percent year-on-year.
Despite the fall in revenues, profitability remained broadly resilient due to a change in the composition of earnings. Profit from associates and joint ventures increased by 5.6 percent year-on-year, driven mainly by higher contributions from Thar coal-based plants and China Power Hub Generation Company.
The completion of the Thar projects also enabled the company to start receiving dividend flows from these assets, strengthening the earnings base and supporting cash generation.
Another important driver of earnings stability was the sharp decline in finance costs. Financing expenses fell nearly 50 percent year-on-year in 1HFY26 as the company continued to repay debt associated with earlier CPEC investments and benefited from lower interest rates in the domestic market.
At the same time, other operating expenses dropped significantly due to the absence of large one-off provisions that had weighed on the previous year’s results. These factors helped keep profit before tax broadly stable despite the significant drop in revenues.
In 2QFY26, HUBC posted earnings growth of 152 percent year-on-year, driven by higher associate income and a sharp decline in finance costs.This strong quarter supported 1HFY26 earnings, helping offset weaker revenues and keeping overall profitability broadly stable.
Operationally, the company’s power assets maintained strong availability levels during the period. The Thar-based plants continued to operate above the minimum availability required under their power purchase agreements and contributed significantly to the national grid.
These plants also generated substantial foreign exchange savings for the country by substituting imported fuels with local coal.
Beyond power generation, HUBC is gradually diversifying into new sectors that could shape its future earnings profile. The company has entered the electric mobility segment through Mega Motor Company, which has launched multiple BYD electric vehicles in Pakistan and is constructing a CKD assembly plant at Gharo with an annual production capacity of 25,000 units.
In parallel, Hubco Green is expanding a nationwide EV charging network along major highways. These investments indicate a strategic shift toward new energy and mobility businesses that could provide long-term growth avenues as traditional IPP earnings mature.
Overall, HUBC’s 1HFY26 results highlight a business model that is increasingly reliant on dividends and profit contributions from associated projects rather than direct generation revenues.
While the decline in revenue reflects structural changes in the IPP landscape, the company’s diversified portfolio, lower financial leverage, and strong dividend inflows from associates have allowed it to sustain profitability and maintain a strong payout profile.