United Power’s profit drops despite revenue surge

United Power Generation and Distribution Company Limited (UPGDCL), a giant independent power producer, reported a 16.18 per cent year-on-year slump in its net profit in the first half of the current fiscal year.

The publicly traded company’s profit dried up due mainly to the failure of receiving any dividends from its subsidiaries in the July-December period of the fiscal year 2022-23.

The power producer’s consolidated net profit stood at Tk 585.93 crore in the first half of FY23, down from Tk 699 crore in the same period last fiscal.

The private-sector company logged revenues of Tk 2,247 crore in the first half of FY23 which was Tk 2,079 crore in the same period last fiscal, according to the company’s unaudited financial statement.

United Power’s consolidated earnings per share (EPS) also dropped to Tk 9.85 for H1 of FY23 from Tk 11.84 for the corresponding period a year earlier.

“EPS become slim owing to the absence of dividends from subsidiaries,” the company stated in a filing posted on the DSE website Monday.

Moreover, the company reported a 29 per cent fall in its second quarterly (October-December) net profit on a year-on-year basis.

Its consolidated net profit stood at Tk 290 crore and earnings per share at Tk 4.84 in the October-December quarter of the current fiscal year, down from Tk 403 crore and Tk 6.85 respectively in the same quarter last fiscal. The power generation and distributor’s revenues also fell nearly 15 per cent YoY to Tk 1041 crore in the second quarter of FY23.

Its consolidated net asset value (NAV) per share stood at Tk 49.23 as on December 2022 which was Tk 56.38 till June same year.

The company’s consolidated net operating cash flow per share (NOCFPS) stood at Tk 9.59 for July-December of 2022 against negative Tk 9.22 for July-December of 2021.

The consolidated revenue and collections from clients from previous receivables increased in 2022, pushing up its net operating cash flow per share, the company stated in the filing.

Meanwhile, UPGDCL, according to the DSE filing, was denied by the Bangladesh Export Processing Zones Authority (Bepza) concerning its request for the protection of the Force Majeure, a clause of any contract exempting a party from fulfilling its obligations in case of any possible circumstances beyond its control, such as natural disaster, war, or pandemic.

The clause aims to protect parties from being held responsible for unexpected and uncontrollable events, preventing them from fulfilling their obligations under the contract.

As a result, UPGDCL issued a notice for shutting down its power plants based in the Dhaka EPZ and the Chattogram EPZ, the DSE filing read.

The BEPZA, however, rejected the company’s closure notice asking it to join the discussion table to get the issue resolved.

Earlier, a gas supply agreement (GSA) was signed between the authorities of Titas Gas and Karnaphuli Gas to comply with the government order on charging gas prices for the independent power producers.

However, the gas prices charged against UPGDCL was much higher, making it harder for the independent power producer to stay afloat.

Despite initial success, recent changes in gas prices created a difficult situation for it, the company noted.

Due to the denial of the Force Majeure by the Bepza, UPGDCL would still be responsible for fulfilling its obligations under its contract, despite having a situation beyond its control.

With a total production capacity of 899 megawatts of electricity, UPGDCL is an independent power producer and distributor operating several power plants.

Three power generation firms – United Anwara Power Ltd, United Energy Ltd, and United Jamalpur Power Ltd – got merged with the parent company United Power Generation and Distribution last year. United Power shares closed at Tk 233.7 per share on the DSE trading floor Monday.