United Power Generation & Distribution Company saw its profit plunge 38 per cent year-on-year to Tk 1.84 billion in the first quarter through September, mainly due to a significant loss in foreign currency transactions.
The leading power generation company’s revenue also dropped around 15 per cent year-on-year to Tk 10.26 billion in the July-Sept quarter, according to a stock exchange filing on Tuesday.
Similar to any other import-dependent companies, the United Power has been staggering in the challenging business climate ushered in by the Russia-Ukraine war in February last year.
The dollar gaining strength against the local currency hit hard power generation companies, as heavy fuel oil (HFO), the fuel used to generate electricity, became costlier in recent quarters, raising import costs.
However, the profit plummeted mainly due to forex loss caused by deferred payments, said company secretary Mostak Ahmmed.
When the company opened LCs (letters of credit) to import furnace oil, the dollar price was around Tk 90 to Tk 95 but it had to settle LCs at Tk 110 to Tk 115 per dollar, he explained.
Moreover, higher finance expenses narrowed the profit margin as banks raised interest rates, said Mr Ahmmed.
United Power’s finance costs soared 28 per cent year-on-year to Tk 310 million in the July-September quarter of FY24.
Its annual profit fell 20 per cent to Tk 8 billion in FY23 for foreign exchange losses.
As profit slumped, the board of the United Power declared a drastic cut in dividend to 80 per cent cash for FY23 from 170 per cent for the previous year.
The power generation company’s stock has been stuck at Tk 233.8 since October last year.