Geregu Power Plc experienced higher costs in the third quarter, which consumed a significant portion of the 17 per cent revenue increase, resulting in only a slight improvement in the bottom line for the period. The power-generating company increased its turnover by N19 billion year-over-year, reaching N131.5 billion by the end of the third quarter, while its profit for the period rose by 3.7 per cent to N25 billion.
Pressure from costs came from production costs and finance expenses, both of which claimed increased proportions of sales revenue.
The interim financial report of the gas-turbine operated electricity generating company for the nine months ended September 2025 shows that production cost grew at a much faster pace than sales during the period at 35.4 per cent to N78.5 billion, against the 17 per cent improvement in sales revenue.
Effectively, the cost of sales claimed 59.7 per cent of turnover at the end of the third quarter operations, rising from 51.5 per cent in the same period last year. The development caused a decline in gross profit from N54.7 billion to N53 billion over the period.
The company however gained some operating strengths that turned the decline in gross profit into an increase in operating profit. These include an upturn from other loss of almost N400 million to other income of N1.3 billion during the review period.
There was also a major cost saving from a drop in impairment loss on receivables from over N10 billion in the same period in 2024 to N4.7 billion in September 2025. Further cost saving was also extracted from administrative expenses, which ended flat at N7.3 billion.
The cost saving and revenue gains from operations resulted in an increase of 14.6 percent in operating profit to N42.2 billion, more than compensating for the decline in gross profit.
But finance expenses, the second source of pressure on the bottom line, claimed virtually all the gains in operating profit. The cost of finance grew from N7.3 billion to N10 billion year-on-year while finance income went down from N6.6 billion to N5.3 billion over the same period.
Net finance expenses therefore multiplied more than six times from N753 million to roughly N4.8 billion year-on-year. This is despite that the company’s interest-bearing debts went down from N65.8 billion at the end of last year to N57.5 billion at the end of September 2025.
The pressure from cost got intensified in the third quarter, which contributed one-third of revenue but 19.6 percent of profit for the period. Cost of sales for the quarter grew by 41.9 per cent to N26.6 billion against an increase of 37.4 per cent in turnover to N43.8 billion.
The third quarter however contributed more than the N1.3 billion other income that enabled the company to turn around from other loss and power the increase in operating profit. The quarter is again responsible for nearly N4 billion of the N4.7 billion impairment loss on financial assets at the end of the third quarter.
The biggest pressure from cost in the third quarter however came from income tax expenses that multiplied well over three times year-on-year to over N6 billion for the quarter, accounting for slightly over one-half of the N12.4 billion tax expenses for the nine months of operations.
Geregu Power ended the third quarter trading with after tax profit slightly up from N24.2 billion to N25 billion year-on-year. The company closed the 2024 full year operations with an after-tax profit of N27.4 billion.
The full year outlook indicates a bottom line in the region of N30 billion for Geregu Power in 2025. The company maintains its stock market leading record on prompt financial reporting with even full year audited accounts usually issued in days after year’s closure.
The company is keeping profit elevated for the third year running in 2025 after its profit plunged by more than one-half to N10 billion in 2022 on gas supply crisis.
It closed the third quarter with earnings per share of N10.04, slightly up from N9.68 per share in the same period last year. Its 2024 full year operations ended with earnings per share of N10.97 and a cash dividend of N8.50 per share.
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