In 1HFY15, Nishat Chunian Power Limited (PSX: NCPL) witnessed a 74 percent year-on-year fall in its earnings on account of lower fuel savings among other reasons. In 1HFY16, the IPP's bottom line remained flat year-on-year. However, the firm witnessed a hefty decline in its revenues in 1HFY16, which remained the key factor in how NCPL's financial performance turned out. The IPP announced its second interim cash dividend of Rs2 per share along with its lackluster financial performance.
Drastic reduction in revenues for Nishat Group's IPP came from lower dispatch of electricity particularly in 2QFY16 where it is expected that the firm saw a decline of around seven to eight percent year-on-year in its dispatch levels. Lower furnace oil prices that saw a decline of around 45 percent year-on-year in the latest quarter further squeezed the power company's top line. However, contraction in revenues also resulted in the firm incurring lower cost of sales and expenses, lifting the gross margins and the net margins significantly.
NCPL's bottom line for 1HFY16 was eventually a multiple of lower international crude oil prices, lower revenues and the absence of high inventory gains (unlike similar period last year). Also, the IPP?s bottom line was adversely affected by a drop in other income due to fall in penal mark-up income. At the same time, the lower finance cost buffed the firm's profits that could have dipped below 1HFY15 levels otherwise.
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