Kot Addu Power Company (KAPCO) announced its 1QFY23 financial result today where the company posted a profit after tax (PAT) of PKR 2,110mn (EPS: PKR 2.40), down by 7% YoY compared to PKR 2,280mn (EPS: PKR 2.59) during same period last year. Decline in earnings is witnessed due a 157% rise in finance cost and imposition of super tax.

Result Highlights

· During 1QFY23, net sales of the company decreased by 33% YoY I 62% QoQ due to lower dispatches, which declined by 68% YoY | 67% QoQ to 549 GWh. The decline in dispatches was witnessed on the back of lower demand from the power purchaser. The overall country power generation also decreased by 10% YoY during the out-going quarter.

· During 1QFY23, gross margins of the company increased by 309bps YoY to 7%. The rise in margins is mainly attributable to lower load factor during the year.

· Other income increased by 39% YoY to PKR 3.8bn during 1QFY23 on the back of higher interest rates.

· During 1QFY23, finance cost increased by 157% YoY due to higher levels of short-term borrowings along with higher interest rates.

· Effective tax rate during 1QFY23 settled at 33% compared to 29% during 1QFY22, given the imposition of a super tax through Finance Act, 2022.

Other Key Developments

In a notice to stock exchange the company informed that it has completed its term of PPA on 24-Oct-2022 and consequently the company will not sell electric power to power purchaser under the terms of original PPA. The company’s generation license was renewed by NEPRA for 3 years till 24-Sep-2024. The company also disclosed that Power Purchaser and they have agreed to enter into a new power purchase agreement for sale and purchase of electric power. Moreover, the company has requested NEPRA for grant of Provisional Tariff for the interim period.

Courtesy – AHL Research