Titas profit falls 12% on BERC charge cut, pension expenditure increase

Titas Gas Transmission & Distribution Co Limited posted a 12 per cent fall in its net profit in the first six months of the ongoing fiscal year 2022-23 (FY23), following a reduction in gas distribution charge in June last.

The Bangladesh Energy Regulatory Commission (BERC) re-fixed the gas company’s distribution margin from 0.25 to 0.13 per cubic metre last year, ignoring the company’s plea for raising the rate near the previous weighted average level of Tk 0.55 per cubic metre, Titas said in its FY23 half-yearly financial report.

The natural gas distributor of the country, identified the cut in distribution charge as the main reason behind its net profit fall.

Besides, a 29 per cent increase in the pension fund expenses compared to the same period last year also contributed to the profit drop.

According to Titas’ half-yearly financial report, the gas company earned a profit of Tk 124.90 crore during the first six months of FY23, compared to Tk 142.66 crore made in the same period previous year.

Lutful Haider Masum, general manager and company secretary of Titas Gas, told Business Post, “If the charges are reduced, the profit will naturally come down. However, our revenue has increased by 9 per cent compared to the same period last year.”

Despite the increase in revenue, the cost of gas lifts has also increased by over 8 per cent. As a result, even if the income increases, the cost increases in proportion, but the profit does not.

Lutful said more employees went into retirement during the same period of FY23 compared to the first six months of FY22, resulting in an increase in expenditure on pension funds.

The company’s pension fund expenditure in the first six months of FY23 was Tk 229.03 crore while the expenditure in the same period of FY22 was Tk 177.53 crore.

Titas Gas, which has an 80 per cent share in the domestic market, saw the highest Tk 160.41 in half-yearly net profit in the last three years in FY20. In FY21, it saw a net profit of Tk 141.34 crore in H1.

Net cash flow per share (NOCFPS) of Titas stood at Tk 6.19 for July-December 2022 as against Tk 4.24 in the same period in 2021.

The company also informed that due to collection of gas sales in respect of relative payments against purchase liability was higher than that of the previous period, its net operating cash flow per share has significantly decreased.

Its net asset value (NAV) per share was Tk 74.43 as on December 31, 2022 and Tk 74.16 as on June 30, 2022.

Titas which got listed in 2008 was welcomed by investors as they had paid significant attention to the company’s stocks at the time of its listing.

Titas stocks also attracted foreign investors with its guaranteed market, fixed profit margins, and consistent cash dividends at the time. But later the foreign shareholders have also reacted immediately by selling Titas stocks and their trust in the state-owned enterprise has yet to be restored.

As on December 31, 2022, the government held a 75 per cent stake in the company, while institutions owned 14.95 per cent, foreign investors 0.18 per cent, and the general public 9.87 per cent.

At the end of June 2022, foreign investments in the company were at 0.47 percent.

The company’s stock was traded at Tk 40.90 per share on the trading floor of the Dhaka Stock Exchange on Thursday.