The management of K-Electric Limited held a corporate briefing session on 17th Nov’23 to discuss the financial result of FY23 and the future outlook.

Brief Takeaways

·     To recall, the company posted a loss after tax of PKR 30.9bn (LPS: PKR 1.12) in FY23 vis-à-vis a profit of PKR 8.5bn (EPS: PKR 0.31), mainly due to a 12% decline in contribution margins, 49% increase in exchange loss and 129% YoY increase in finance cost.

·     KE is the only vertically integrated power utility in Pakistan, with a customer base of more than 3.5mn customers, and a peak demand of over 3,650 MW.

·     KE has a total installed capacity of 2,817 MW, a transmission capacity of 6,965 MVAs, and a distribution capacity of 8,808 MVAs. 

·     Units sent-out during FY23 decreased by 7.3% to 18,356 GWh compared to 19,802 GWh during FY22. The decline in units sent out is witnessed due to inflation, policy rate hikes, and economic contraction.

·     The generation efficiency has increased to 42.2% during FY23 from 38.6% during FY22. The efficiency has increased due to the addition of 900 MW (BQPS-III) RLNG-based power plant.

·     The recovery ratio during FY23 decreased by ~4pts to 92.8% compared to 96.7% during FY22. The decline in recovery is witnessed due to 42% rise in consumer-end tariff, FCA, and the overall inflationary pressure.

·     During FY23, both Unit-I and Unit-II, (450 MW each) of KE’s 900 MW RLNG-based power plant (BQPS-Ill) were successfully commissioned, and commercial operations of the respective units were declared during 3QFY23  and 4QFY23, respectively. The company also intends to commission both units of BQPS-III on HSD during FY24 to mitigate any fuel supply issues.

·     During FY23, successfully achieved NEPRA’s T&D loss benchmark of 15.3%.

·     The contribution margin has declined by 12% YoY to PKR 86.6bn during FY23 vs. PKR 98.8bn during FY22 due to a 7.3% decrease in units sent-out.

·     The impairment loss increased by 25% YoY to PKR 31.1bn during FY23 due to high inflation, an increase in consumer-end tariff, and deteriorating economic conditions.

·     Exchange loss increased by 49% YoY to PKR 13.5bn during FY23 due to 28.4% PKR depreciation.

·     Finance costs also increased by 129% YoY to PKR 34.6bn primarily due to the rise in interest rates along with higher borrowing (+9.4%).

·     Tax reversal increased by 296% YoY to PKR 11.5bn. This increase was primarily due to the deferred tax income resulting from the revaluation of PPE along with prior tax income stemming from favorable financial outcomes.

Courtesy – AHL Research