Geregu Power forecasts 148% year-on-year profit growth for Q3 2024

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Geregu Power Plc has forecasted a profit after tax of N9.9 billion for Q3 2024, representing a 148% year-on-year increase from the N3.98 billion net income posted in Q3 2023.

According to the company’s cash flow forecasts for Q3 2024, it is projecting a revenue of N42.5 billion during the quarter, representing a 102% YoY growth from the N21.05 billion revenue posted in Q3 2023.

This projected revenue growth stems from an anticipated cash receipt of N15.8 billion from energy and capacity charges during the quarter.

For proper context, throughout 2023, the company posted a total receipt of N31.1 billion from capacity charges.

Key Highlights: Q3 2023 versus forecasted Q3 2024

The company anticipates a 112% YoY increase in cost of sales to N21.9 billion from N10.3 billion in Q3 2023. For Geregu Power, the major contributor to its cost of sales is LNG supply and transportation.

In April 2024, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA ) set the LNG price to GENCOs at $2.42 per cubic feet, marking an 11% increase from the previous price of $2.18.

However, before the gas price hike in Q1 2024, Genco already posted a 222% YoY increase in cost of sales, as it recorded a cost of N21.5 billion, compared to N6.7 billion in Q1 2023.

Hence, the over 100% projected YoY increase in sales cost is attributable to the logistics associated with the gas supply.

The company is projecting a gross profit of N20.6 billion during the quarter, marking a 92% YoY from the N10.7 billion recorded in Q3 2023.

Administrative expenses are also projected to increase by 74.8% year-on-year to N4.9 billion, from N2.8 billion as of Q3 2023.

The company is projecting a pre-tax profit of N15 billion for Q3 2024, representing 156% YoY growth from the N5.9 billion pre-tax profit recorded in Q3 2023.

Geregu Power is projecting a net cash flow of N2.3 billion from its operating activities during the quarter.

It is projecting N5.02 billion on interest payments for term loans and bonds during the quarter.

Geregu’s 2024 performance so far

In its Q1 2024 financial statement, Geregu Power Plc posted a N50.4 billion revenue, reflecting a 254% year-on-year growth from Q1 2023.

It posted a profit after tax of N14.46 billion during the quarter, reflecting a 308% growth from the N3.55 billion profit after tax posted in Q1 2023.

As of Q1 2024, the company’s trade receivables had increased to N92.7 billion, marking an 84% increase from N50.5 billion as of FYE 2023. The increase in trade receivables for Q1 2024 is reflective of higher debts incurred by GENCOs in Nigeria.

However, the company’s accounts for Q1 2024 also reflected a 35% increase in payables to gas suppliers, as it had a gas account payable of N63.3 billion, from N46.7 billion as of FYE 2023.

It remains to be seen what Geregu’s financial performance will look like in Q2 2024, as the Federal Government announced a tariff hike for electricity customers in Band A in mid-May 2024.

According to a policy document making the rounds last week, debts in the power sector had hit N1.7 trillion, with the document proposing the repayment of these debts through bonds and promissory notes.

Geregu Power closed trading on June 10, 2024, with a share price of N1000.

It is also one of the top-gaining stocks in the NGX this year, with a year-to-date gain of 151%.

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