Geregu Power: Revenue Growth, Finance Income Drives Profit

Kayode Tokede  

Geregu Power Plc reported double-digit increase in revenue and finance income that played a significant role in the company’s profit generation in nine months ended September 30, 2023.

Nigeria’s leading electricity generation company reported a profit before tax of N17.4 billion in nine months of 2023, marking a substantial growth of 25.3 per cent from N13.9 billion reported in the corresponding nine months of 2022.

In terms of profit after tax for the period under review, Geregu Power achieved N11.36 billion, up by 13.3 per cent from N10.03 billion in the same period last year.

It’s worth noting that the company has surpassed its total profits of N10.1 billion reported in 2022 financial year.

These impressive financial results demonstrate Geregu Power’s resilience and strong performance in a challenging economic environment.

Amid the challenging economic conditions, Geregu Power’s revenue generation in the period stood at N55.75 billion, an increase of 43 per cent from N39 billion reported in corresponding nine months of 2022.

The breakdown of revenue revealed that energy sold closed nine months of 2023 at N34.79 billion, representing an increase of 40.4 per cent from N24.78 billion in nine months of 2022, while capacity charge increased to N20.95 billion in nine months of 2023, a growth of 47.3 per cent from N14.23 billion reported in nine months of 2022.

revenue performance

An analysis of the revenue performance in the most recent quarter highlights a significant surge in key revenue streams, contributing to the remarkable overall performance of Geregu Power.

The company’s performance during the reviewed period was achieved despite the challenges presented by a demanding business environment, marked by escalating inflation and the depreciation of the Nigerian naira, which also had an impact on its bottom line.

Furthermore, the company reported earnings of N7.9 billion from capacity charges, compared to N1.9 billion for the same period last year.

Remarkably, Geregu Power has not only exceeded its entire 2022 revenue of N47.6 billion but has achieved this milestone in just the first nine months of 2023.

In the period under review, Cost of Sales (CoS) stood at N26.86 billion in nine months of 2023, an increase of nearly 34 per cent from N20.06 billion reported in nine months of 2022, driven by 38 per cent growth in gas supply and transportation.

Geregu Power’s gas supply and transportation stood at N25.17billion in nine months of 2023 from N18.2billion in nine months of 2022, while plant depreciation dropped to N1.69billion in nine months of 2023, a decline of 9.3 per cent from N1.86billion reported in nine months of 2022.    

It brings the company’s CoS/Revenue to 48.18 per cent in nine months of 2023 from 51.43 per cent in nine months of 2022. 

The interplay between revenue and CoS brings Geregu Power’s gross profit to N28.89 billion in nine months of 2023 from N18.95 billion declared in nine months of 2022. 

Notably, the company reported an impairment loss of N3.1 billion, a significant increase from the N162 million recorded in the same period in 2022. This impairment reflects provisions made for energy sold but yet to be received in due time.

Administrative expenses also witnessed a substantial increase, rising from N2.7 billion in the previous year to N5.8 billion during the period under review.

This increase can be attributed to the effects of rising inflation rate and weaken foreign exchange rate in domestic economy.

personnel cost

An illustrative example of this expense increase can be seen in the personnel costs, which escalated from N885 million to N1.4 billion, indicating potential salary and bonus adjustments for staff.

Furthermore, expenses related to the repairs and maintenance of plants and machinery experienced a significant rise, going from N89 million to N1.5 billion. This suggests the company may have incurred a one-time cost for the maintenance of its power plant.

During the quarter, Geregu Power recorded a finance income of N.09 billion as against N2.07 in corresponding nine months of 2022, and it effectively mitigated the impact of its finance costs amounting to N8.4 billion in nine months of 2023 from N2.71 billion reported in nine months of 2022.

The breakdown of finance income showed that interest income on bank deposits closed nine months of N4.67billion from N972.38milllion in nine months of 2022, while interest income on related party receivable was at N1.42billion in nine months of 2023 from N1.18billion reported corresponding nine months of 2022.

As for finance cost, interest expenses on borrowing for nine months of 2023 stood at N4.05billion from N3.2billioon in nine months of 2022 as interest expenses on bond increased to N4.44billion in nine months of 2023 from N1.02billion in nine months of 2022.

This resulted in a net finance cost of N2.4 billion, a slight increase from the N2 billion reported during the same period in 2022.

As of October 20th, 2023, Geregu Power’s share price closed at N315 per share. The stock price has gained 111.41per cent Year-till-Date as it opened the year at N149 per share amid surge in investors demand.

Additionally, Geregu Power distributed dividends of N20 billion, sourced from its 2022 profits, further highlighting its strong cash flow position and commitment to returning value to shareholders.

74.3% Total Assets Growth

As Geregu power’s total assets closed September 30, 2023 at N157.51billion from N174billion reported in 2022full year, total liabilities in the period contributed 74.3 per cent as against 71.78 per cent in 2022 FY.

From the balance sheet position, the power company’s total liabilities dropped to N117billion as of September 30, 2023 from N124.9billion reported in 2022 FY.

Notably, Geregu Power has significantly reduced its total external debt, which currently stands at N18.3 billion, compared to N32.9 billion from 2022FY.

The company successfully repaid debt totaling N36.6 billion in nine months of 2023, showcasing a commitment to managing its financial obligations prudently.

In addition to its debt management strategy, Geregu Power has a 7-year bond worth N41.19 billion.

This bond has been earmarked to support the acquisition of another power plant, which is currently in the final stages of the bidding process.

This strategic move reflects the company’s forward-looking approach to expanding its operations and further solidifying its position in the power generation sector.

These financial maneuvers demonstrate Geregu Power’s efforts to maintain a healthy financial profile while strategically pursuing growth opportunities in the energy sector.

In the nine months of 2023, Geregu Power reported an impressive net cash flow from operations amounting to N37.5 billion, which marks a substantial increase from the N4.3 billion reported during the same period in 2022.

Throughout the year, the company successfully repaid a net debt of N18.5 billion and also settled its bond coupon expenses, totaling N5.7 billion.

The company’s robust financial position is evident in its total cash holdings, which stood at N49.3 billion at the end of the period.