Engro Powergen Qadirpur Limited (PSX: EPQL) announced its first quarter result yesterday which saw negligible growth in the firm’s bottom-line as compared to the company’s 1QFY17. EPQL saw its revenue go down by 5 percent which is probably on account a lower load factor for the period.
The company’s cost of sales went down by 9 percent which helped EPQL register a 9 percent increase in its gross profit as compared to the same period last year. Even though revenues have remained stagnant for the company over the past few years, yet both gross and net margins have increased in comparison.
Effective cost management has enabled the company to reduce its administrative expenditure by 13 percent but operating profit still clocked in lower as compared to 1QFY17. The financing cost also went down by almost 50 percent which might be attributable to higher long term interest charges as well as improved interest income from NTDC.
Recall that EPLQ has paid two senior lenders’ installments worth $19.6 million in 2017 which included principal repayment of $17.1 million. However, despite reduction in financing cost the company’s PAT showed negligible change on year-on-year basis.
EPQL had classified Rs4.3 billion as overdue from NTDC by December, 2017 while the company’s amount payable to SNGPL stood at Rs1.7 billion. Even though the present government has started clearing some portion of the circular debt, it remains to be seen how much of IPP overdue receivables will actually be resolved by the end of the current government’s tenure.
Going forward, the company believes that relatively lower gas prices for IPPs along with higher global oil prices will help gas based power plants to rise in the merit order because of their comparatively lower input costs, higher efficiencies and better environmental parameters.
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