Geregu Power’s Q1 Earnings’ Leap Sets Pace For Exceptional Year

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An exceptional year in earnings is in the making for Geregu Power Plc with a big step forward in the first quarter to set the pace.

The interim financial report of the power generating company for the first quarter ended March 2023 shows that revenue jumped three and half times year-on-year to over N50 billion and
after-tax profit multiplied more than four times to N14.5 billion.

The company’s revenue for the quarter, which comprises energy sold and capacity charge, already stands at 61 per cent of the closing figure of under 83 billion for the 2023 full year.

Also, the company has already raked in more than 90 per cent of the preceding year’s after-tax profit of N16 billion within the first quarter.

Should the company maintain quarterly averages at the first-quarter levels, Geregu Power can be expected to be one of the most fertile grounds for building wealth for investors in 2024. Sales revenue could shoot to the sky to close in the region of N200 billion and after-tax profit could strike the N60-billion mark for a full year.

The company is accelerating from the high-speed growth it registered last year when it pushed sales revenue far ahead of target to achieve a clear 74 per cent climb to a new peak at N82.9

While after-tax profit rose by about 58 per cent to close at over N16 billion in 2023, it remained below the peak profit figure of N20.6 billion the company recorded in 2021.

Based on the first quarter growth rate, the company is confident of beating its previous record and attaining a new profit peak at the half year.

The growth functions of Geregu Power in the first quarter are the multiplying revenue, a cut in finance expenses and a general slowdown in other costs. Energy sold grew by 241.4 per cent to N31 billion in the first quarter and capacity charge rose by 277 per cent to N19.4 billion over the same period.

Revenue growth outpaced an increase of about 204 per cent in the cost of sales to N22 billion, which powered more than a four-time jump in gross profit to N28.4 billion at the end of the
first quarter.

An impairment loss on financial assets of almost N4 billion and an increase of 124 per cent in administrative cost claimed part of the increase in gross profit and slowed down the growth
rate in operating profit to 276 per cent to close at N21.8 billion.

A strong reinforcement came from finance expenses, which went down by 27 per cent to N2.3 billion, changing the reading from a net finance cost of N426 million to a net finance income of
about N134 million over the review period.

With that, the company has addressed the problem of a major increase in the cost of finance that squeezed margins last year. Finance expenses nearly doubled to N14.5 billion in 2023, which created a net finance cost of N6.7 billion against a net finance income of N348 million in 2022.

Geregu Power has also reduced its interest-bearing debts from N64 billion at the end of 2023 to 57.7 billion at the end of the first quarter. The company ended the first quarter trading with a pre-tax profit of N21.9 billion, more than four times the corresponding figure of N5.4 billion in 2023 and an after-tax profit of N14.5 billion is also more than four times the N3.5 billion it posted in the same period last year.

Earnings per share amounted to N5.78 for the first quarter against N1.42 per share for the same period last year and N6.42 per share for the 2023 full year.