Hub Power Company Limited (PSX: HUBC) delivered a strong financial performance in FY24, with significant growth in both revenue and profitability. The company reported consolidated earnings of Rs75 billion, reflecting a 22 percent year-over-year increase.
The company’s revenue growth for FY24 stood at 14 percent year-on-year, driven by higher dispatches from Thar Energy Limited (TEL), the devaluation of the PKR against the USD, and improved operational efficiencies. HUBC's total generation performance was mixed across its various plants. TEL and TNPTL, both Thar coal-based plants, demonstrated strong performance with year-on-year increases in generation. However, the China Power Hub Generation Company (CPHGC) experienced a decline.
HUBC also saw an improvement in gross margins during the year, benefiting from favorable currency devaluation and contributions from new power plants. The company’s net margins increased despite the rise in finance costs, which were up 38 percent year-on-year. The share of profits from associates supported the bottom line, jumping 44 percent year-on-year due to the commencement of operations at ThalNova Power Thar (TNPTL) and TEL, as well as the depreciation of the domestic currency.
HUBC announced a total dividend of Rs20 per share for FY24, down from Rs30 per share in FY23. This reduction is attributed to increased capital expenditure and new investments.
Hub Power Company Limited’s earnings growth reflects the after-effects of its strategic diversification. Recently, the company's strategy has focused on expanding into new industries while continuing to capitalize on its core energy generation capabilities. It has entered into new business areas, including a joint venture for mining operations with Ark Metals and a partnership with BYD Auto Industry Co. Ltd. to explore opportunities in electric vehicles. These ventures are part of HUBC's strategy to diversify its revenue streams. The company is also exploring the conversion of its base plant from residual fuel oil to Thar coal, which could lead to further profitability improvements. Additionally, TEL and TNPTL’s operations are expected to continue supporting earnings growth in the coming years. However, challenges such as higher finance costs and ongoing conversion projects could temporarily squeeze dividends.
