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Why Summit Power's yearly profit dropped 47%

Staff Correspondent
22 Feb 2024 21:56:13 | Update: 22 Feb 2024 21:56:13
Why Summit Power's yearly profit dropped 47%

Summit Power, the country's largest private sector power producer, has reported a 47 per cent fall year-on-year in net profit in FY2022–23, mainly due to foreign exchange losses.

Meanwhile, the publicly traded company has declared its lowest dividend in eight years for its shareholders for FY23. It declared a 10 per cent cash dividend to its shareholders for the year that ended June 30, 2023. The dividend amount was 20 per cent in the previous fiscal year.

The dividend declaration came at a board meeting on Tuesday, which was disclosed on Thursday through the Dhaka Stock Exchange (DSE) website.

Summit Power’s net profit fell by 46.48 per cent to Tk 221 crore in FY23, which was Tk 413 crore the year before, according to the financial statement.

Talking to The Business Post, Summit Power Company Secretary Swapon Kumar Pal said there were three major reasons, caused by the US dollar exchange rate and forex reserves crises resulting from the ongoing global economic turmoil, for the decrease in the company’s profit.

“First of those three reasons was the fuel cost. It was an excess of fuel revenue on account of the adverse exchange rate. Second, an increase in net finance expenses arising out of working capital support through local banks due to excessive delay in payment of bills from only off-taker, Bangladesh Power Development Board.

“Lastly, increased foreign exchange loss on quarterly servicing of foreign currency project financing,” he added.

Summit Power, a subsidiary of Singapore-based holding company Summit Power International (SPI), owns and operates 15 power plants at different locations in Bangladesh with a total installed capacity of 975.96 megawatts.

Its consolidated earnings per share (EPS) were Tk 2.07 in the last fiscal year, which was Tk 3.87 in the previous fiscal year of 2021-22.

To approve the dividend and the financial statement, Summit Power will hold the Annual General Meeting on April 18, and the record date is March 14.

The company’s net asset value (NAV) per share stood at Tk 38.02 and net operating cash flow per share (NOCFPS) at Tk 7.04 for the year that ended on June 30, 2023, compared to Tk 35.72 and Tk 5.91, respectively, for the previous fiscal year.

The company said that no dividend has been declared out of the Capital Reserve account, the Revaluation Reserve account, through reducing Paid-up Capital or through any Unrealised Gain or from the Profit Earned prior to the incorporation of the Company, if any, or doing anything so that the post-Dividend Retained Earnings become negative or a debit balance.

Listed on the Dhaka bourse in 2005, the company has a paid-up capital base of Tk 1,067 crore. At the end of Thursday’s trading session, Summit Power share's closing price was Tk 25.70 each at the Dhaka bourse.

Summit Power International (SPI) established Bangladesh’s first independent power plant in 1997, and is now the largest Independent Power Producer (IPP) in the country, reflecting 17 per cent of total private installed capacity and 7 per cent of total installed capacity.

SPI owns and operates a total of 18 power plants in operation or under development with a total capacity of 2,255 MW, a further 277 MW through its associate company Khulna Power Company Limited (KPCL), and operates Bangladesh’s second Floating Storage and Regasification Unit and LNG import terminal with a capacity of 500 mmcf/d, as per its website.

Bangladesh is largely dependent on the private sector for electricity, which supplies more than 50 per cent of the total power generated.