Geregu Power Plc has recovered from the revenue losses and profit drop it suffered in the first quarter, with a strong upswing in the second quarter, overwriting the poor records of the preceding quarter.
Management hopes for further enhancement in the third quarter, which could increase the profit to N32 billion.
Reversing a drop of 37 per cent in sales revenue in the first quarter, the power generating company grew the topline by 84.7 per cent year-on-year to N55.9 billion in the second quarter. Additionally, the bottom line has turned upward from a 28 per cent drop in the first quarter to a leap of 75.7 per cent to N9.7 billion over the same period.
The company’s interim financial report for the half year ended June 2025, however, shows that the weakness of the first quarter countered the strong growth of the second quarter, keeping the half-year profit level flat at slightly over N20 billion.
The company has resolved gas supply issues that caused its loss of sales in the first quarter, which has reflected in strong recoveries in capacity delivered and energy sent out.
Revenue from sold energy has rebounded from a 48 per cent drop in the first quarter to 80.9 per cent year-on-year, to almost N36 billion in the second quarter. Likewise, revenue from capacity charge has increased from a drop of 44 per cent to an increase of 92 per cent to almost N20 billion over the same period.
The company’s management nevertheless continues contending with rapidly rising costs that are impinging on margins. The much bigger sales revenue of the second quarter came with a lower profit delivery than the first quarter, indicating a significant loss of profit margin in the quarter.
While the second quarter accounted for 63.8 per cent of half year turnover of N87.6 billion, it produced 48 per cent of the closing profit of N20 billion for the six months of trading.
The difference is cost increases that claimed a lot of the revenue gains during the second quarter. The biggest of them is production cost that grew ahead of sales in the quarter at 87 percent year-on-year to N32 billion.
Another major cost increase in the quarter came from impairment loss on financial assets that nearly tripled to N6 billion over the review period.
The third element of the company’s rising cost tripod in the second quarter is net finance cost that surged more than four folds to N1.7 billion on account of a drop in finance income and an increase in finance cost.
The cost increases led to a decline in profit margin in the second quarter at 17.4 percent against 18.3 percent in the same quarter in 2024.
Management is however hopeful to recharge the operating momentum further in the third quarter with improved margin and profit delivery. The company’s third quarter forecast expects an after-tax profit of N11.7 billion for the quarter, taking the closing figure for nine months of operations to nearly N32 billion.
The company’s half year numbers show a turnover of N87.6 billion, which is an increase of 8.6 percent year-on-year. This is against a much stronger growth of 32 percent in cost of sales to nearly N52 billion over the same period.
The cost-income growth disparity resulted in a drop in gross profit from N41.5 billion to N35.7 billion over the review period. A drop in impairment loss on financial assets at half year helped to narrow the decline in operating profit at N29.7 billion against N30.4 billion in the same period last year.
Pressure mounted from net finance expenses, as finance income went down and cost grew. Net finance cost multiplied about 13 times year-on-year to N3.4 billion at the end of half year trading.
That incursion of net finance expense on earnings led to a drop in pre-tax profit from N30 billion to N26 billion over the period. The company’s interest-bearing debts have been reduced from the region of N74 billion in the first quarter to less than N63 billion at the end of the second quarter.
The final saving grace that prevented a drop-in after-tax profit at half year came from a drop in tax expenses from N10 billion to N6 billion over the period. Profit for the half year therefore closed flat at a little over N20 billion.
The company ended half year operations with earnings per share of N8.07, which is slightly up from N8.01 per share in the same period last year.
Geregu Power closed last year’s operations with a turnover of N137 billion and an after-tax profit of N27.4 billion.
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