United Power's Q1 profit surges 127pc, fuelled by bulk power tariff hike

United Power Generation & Distribution Company posted an impressive 127 per cent year-on-year growth in profit to Tk 4.19 billion in the first quarter through September of FY25, driven by bulk power tariff hike and stable foreign exchange rates.
The power generation company's consolidated earnings per share (EPS) jumped to Tk 7.13 in the quarter from Tk 3.12 in the same quarter a year ago, according to its un-audited financial statements.
Following the earnings disclosure, the stock of United Power went up almost 10 per cent to Tk 141.1 per share on Thursday on the Dhaka Stock Exchange (DSE).
"A rise in bulk tariffs for electricity and stable foreign exchange rates, compared to the same period of last year, contributed to an increase in consolidated EPS," said the company in its earnings note.
The government in March this year raised the bulk electricity price by 5 per cent on an average to Tk 7.04 per unit.
Sales of electricity also grew 12 per cent year-on-year to Tk 11.48 billion in July-September this year.
United Power is the country's first commercially independent power producer. It supplies power to Bangladesh Export Processing Zones, Bangladesh Rural Electrification Board, Bangladesh Power Development Board and private customers.
Its revenue from Bangladesh Export Processing Zones, Bangladesh Rural Electrification Board, and Bangladesh Power Development Board increased 40 per cent, 18.7 percent and 9 percent respectively during the quarter, compared to the same quarter of the previous year.
However, revenue from private customers dropped 6 per cent year-on-year in July-September.
Meanwhile, the dollar-taka exchange rate has remained almost stable at Tk 120 since the ouster of the Hasina-led government. Policy measures taken by the Bangladesh Bank narrowed the gap between the formal and kerb markets.
As the central bank stopped day-to-day interference in the forex market, rate fluctuations eased, bankers say.
United Power's exchange loss in foreign currency transactions in the quarter was Tk 108 million, a slight increase from Tk 107 million in the same quarter the year before.
Net finance expenses were up 12 per cent year-on-year to Tk 96 million in July-September as borrowing cost escalated on the back of high interest rates in the first quarter, compared to the same period last year.
A reduction in power generation cost helped the company secure a higher profit in the quarter. Electricity generation costs slid due to the price fall of furnace oil in the global market.
The cost of sales, which includes all associated costs to produce power, stood at Tk 6.91 billion, which was 60 per cent of total revenue earned in July-September this year, down from nearly 71 per cent of the revenue in the same quarter last year.
Unlike all other private-sector power producers, two plants of United Power at the export processing zones of Dhaka and Chattogram can directly sell power to factories at a negotiated price.
Despite the escalation of profit, the consolidated net operating cash flow per share, a measure of a company's ability to generate cash from its operations, fell to Tk 1.85 in the first quarter of FY25 from Tk 5.19 in the same quarter last year, as higher interest rates and delayed collection of receivables from the BPDB stressed the cash flow.
Moreover, the company disbursed more than 4.50 billion to the suppliers to ensure uninterrupted plant operations.
Annual Financial performance
United Power's annual profit rose marginally by 0.12 per cent year-on-year to Tk 8.25 billion in FY24 while revenue dropped 16 per cent year-on-year to Tk 34.78 billion in the year.
The board of directors declared 60 per cent cash dividends for FY24, down from 80 per cent the year before.

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