Transcorp Power Plc recorded a decline in revenue and profit in the first half of 2026, and its hopes for a rebound in earnings in the second half hinge on overcoming two significant hurdles—both largely outside the company’s direct control.
The company’s capacity to supply electricity to the national grid is hindered by frequent vandalism and repeated transmission line failures.
The biggest hurdle for Transcorp Power’s operational progress in H2 remains the unstable transmission infrastructure. While the company hopes for a stronger second-half performance, thanks to expected boosts in power generation, this ongoing issue continues to pose a significant risk.
Managing Director/CEO Peter Ikenga, commenting on the half-year results, affirmed the company’s commitment to stronger earnings in the second half, targeting a return to growth for the full 2026 financial year.
The second major hurdle is the company’s inability to collect enormous trade receivables, which now account for over 81 per cent of its N619 billion balance sheet.
As of mid-2026, trade receivables stood at nearly N502 billion—eight times the company’s borrowings of around N63 billion. This severe cash flow constraint has forced Transcorp Power to take on new debt, despite the theoretical potential to become a net lender if receivables were collected.
Revenue took a plunge as sales for H1 2026 fell to under N182 billion, down from about N206 billion in H1 2025. Revenue Streams became weak as capacity charge dropped from N55 billion to N43 billion, and energy delivered slipped from nearly N151 billion to below N139 billion.
For its recovery target, it has to match 2025’s full-year sales (over N398 billion), for which the company needs H2 turnover above N216 billion. For 10 per cent growth, about N256 billion is required.
Despite aspirations for a revenue rebound, the lack of a clear resolution for transmission line reliability makes robust recovery uncertain. Sector-wide evacuation challenges continue to cause high earnings volatility, with analysts projecting full-year revenue of around N375 billion—suggesting that losses from the first half may persist through year-end.
Cash Flow and Financing Pressures are pronounced as the inability to collect receivables has strained cash flow, turning operating activities into a net cash drain of N5.6 billion at half-year, compared to net cash generation of over N49 billion a year earlier.
To fund dividends and service debt, Transcorp Power was compelled to raise new loans, and its cash reserves plummeted from about N35 billion to less than N668 million over the period.
Finance income fell sharply by 68.5 per cent year-on-year to N538 million, while finance costs rose 4.4 per cent to N3.8 billion.
The company’s payment terms with its major customer, Nigerian Bulk Electricity Trading Plc (NBET), are not being honoured, resulting in uncollected interest on overdue bills—estimated internally at over N72 billion by end-2025, but with no firm government commitment to payment.
The bottom line is that Transcorp Power closed the half-year with earnings per share of N5.13, down from N5.87 a year earlier. It declared an interim dividend of N1.50 per share, requiring N11.2 billion in payout—funds it must source in the face of ongoing cash flow challenges.
Unless transmission line reliability improves and progress is made in receivables collection, Transcorp Power’s path to earnings recovery in the second half will remain fraught with uncertainty and financial pressure.
