United Power's profit keeps sliding on high forex loss, finance cost

United Power Generation & Distribution Company's profit dropped 4 per cent year-on-year to Tk 2.78 billion in the second quarter of FY24, owing to high borrowing costs and foreign currency transaction loss.
The profit decline was accompanied by an 18 per cent fall in revenue to Tk 8.51 billion in October-December last year, according to its unaudited financial statements published on Wednesday.
The independent power generation company's half-yearly revenue also fell 16 per cent to Tk 18.77 billion while profit plunged 21 per cent to Tk 4.63 billion in July-December last year.
Company secretary Mostak Ahmed said the business had been impacted by foreign currency transaction losses as the taka had lost its value against the dollar.
"At the same time, borrowing cost rose on the back of high interest rates [in July-December 2023] compared to the same period of the previous year," he said.
The company's half-yearly finance costs jumped more than 9 per cent year-on-year to Tk 603 million in the period through December last year.
During the time, foreign currency transaction losses surged 400 per cent year-on-year to Tk 1.25 billion.
The power producer's electricity generation costs slid slightly year-on-year in the six months to December, but high finance expenses and losses in foreign currency transactions ate up income.
The cost of sales, which includes all associated spending to produce power, stood at Tk 12.72 billion, which was 68 per cent of the total revenue in July-December, down from 72 per cent of the revenue earned in the same period of the previous year.
Profit was also eroded by higher spending on oil imports and energy price swings.
Meanwhile, United Power's long-term debt burden declined to Tk 1.18 billion from Tk 3.02 billion, but short-term loans almost doubled year-on-year to Tk 10.67 billion in the six months through December last year.
Although the company's capacity charge rose 7.30 per cent year-on-year to Tk 5.29 billion, its consolidated revenue was Tk 18.77 billion in the first six months of FY24. Collection was only Tk 13.75 billion.
The company at the time had to pay suppliers Tk 11.72 billion to continue the operation of its power plants.
Moreover, finance expenses contributed to a major cash outflow.
As a result, the consolidated operating cash flow per share fell sharply to Tk 2.47 for July-December 2023 from Tk 9.59 for the same period the year before.
United Power's annual revenue had fallen 16 per cent to Tk 41.31 billion in FY23 while profit plummeted 19 per cent to Tk 8.24 billion for the year.
It provided 80 per cent cash dividends for FY23, reduced from 170 per cent for FY22.
Listed in 2015, United Power is the 8th largest stock if market cap is considered. Its stock fell 0.80 per cent to Tk 175.90 per share on the Dhaka Stock Exchange on Wednesday. After remaining stuck on the floor for 18 months, the stock plunged more than 32 per cent in the past six days after the withdrawal of price restriction.

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