DESCO profit exhausts as fuel price hike drain earnings

The steep rise in oil prices in the global market shattered the Dhaka Electric Supply Company Ltd (DESCO) as the company’s net profit slumped by 14 per cent on a year-on-year basis in the fiscal year 2021-22. 

Besides, the high provision for the deferred tax against its credit taken from lenders also played a role to weaken its profit. 

The company registered a net profit of Tk 63.21 crore in FY22 against the figure of Tk 73.91 crore in the previous fiscal.

The company’s earnings per share in FY22 also fell to Tk 1.59 from Tk 1.86 in the previous fiscal. 

The company officials say the reason behind the decrease in its earnings per share was the deferred tax provision against its loans that was introduced by the country’s revenue authority recently. 

Prof Kawsar Amir Ali, managing director of Dhaka Electric Supply Company, told The Business Post that the price rise in fuel oil in the global market pushed down their profit in the just concluded fiscal (2021-22). 

The company’s net operating cash flow per share (NOCFPS) stood at Tk 13.09 for FY22, which was Tk 14.82 in FY21. 

According to the company’s financial statement, it had to pay Tk 523.18 crore more than the previous year for the purchase of fuel oil but received only Tk 262.24 crore extra from energy sales than FY21, creating a loss of Tk 260.94 crore that hit its profit the hardest. 

The company reported a NAV per share of Tk 65.96 for the year ended June 2022 against Tk 65.24 for the year ended June 2021. 

The board of directors of the power sector company recommended a 10 per cent cash dividend for the fiscal year 2021-22, the same as in FY21. 

The company is scheduled to hold its annual general meeting (AGM) on January 14, next year while the record date is fixed as November 17 this year.

As on September 30, this year the government owned a 67.66 per cent stake in the company, while institutions held 23.78 per cent, foreign investors 0.05 per cent, and the general public 8.51 per cent. The company’s stock was traded at Tk 36.60 per share on the trading floor of the Dhaka Stock Exchange on Sunday.