Kohinoor Energy Limited (KOHE), one of Pakistan’s key independent power producers, reported a significant decline in its profitability for the third quarter of 2024, as the company’s net profit after tax fell by 45.58% year-on-year (YoY). KOHE posted a profit of Rs313.73 million [EPS: Rs1.85], compared to Rs576.5 million [EPS: Rs3.4] in the same period last year, according to the company’s latest financial disclosure on the Pakistan Stock Exchange (PSX).
Declining Revenue Hits Bottom Line
The steep drop in profitability is largely attributed to a substantial decrease in revenue. For the quarter ended September 30, 2024, Kohinoor Energy’s top line plummeted by 62.8%, falling to Rs1.46 billion from Rs3.93 billion in Q3 2023. This considerable reduction in sales outpaced the company’s cost-saving efforts and ultimately eroded its gross profit margins.
While the cost of sales fell by 70.1% YoY to Rs961.95 million, it was not enough to offset the sharper decline in revenue, leading to a 30.2% reduction in gross profit, which stood at Rs500.62 million for Q3 2024 compared to Rs717.18 million in the same quarter of the previous year.
Surge in Other Income
On a positive note, Kohinoor Energy recorded a massive spike in other income, which soared by 10,201.9% to Rs16.17 million in Q3 2024, up from a mere Rs157,000 in Q3 2023. Despite this extraordinary increase, the amount was still relatively small and had no major impact on the overall financial outcome for the company.
Rising Expenses Add to Pressure
Administrative expenses rose by 21.6% YoY, reaching Rs88.13 million in Q3 2024 compared to Rs72.5 million in the corresponding period last year. This rise in expenses further weighed down the company’s bottom line.
In addition to administrative costs, KOHE also faced a sharp increase in finance costs, which grew by 62.7% YoY. The company’s finance costs stood at Rs110.73 million, up from Rs68.08 million in Q3 2023, largely due to higher interest rates.
Tax and Final Results
On the tax front, the company reported a higher tax payment of Rs4.2 million in Q3 2024, compared to a significantly lower tax outlay of Rs0.26 million in the same period last year. This increase in tax expenses further eroded net profits.
Financial Summary for Q3 2024
- Sales: Rs1.46 billion (down 62.8% YoY)
- Cost of Sales: Rs961.95 million (down 70.1% YoY)
- Gross Profit: Rs500.62 million (down 30.2% YoY)
- Administrative Expenses: Rs88.13 million (up 21.6% YoY)
- Other Income: Rs16.17 million (up 10,201.9% YoY)
- Finance Cost: Rs110.73 million (up 62.7% YoY)
- Net Profit After Tax: Rs313.73 million (down 45.58% YoY)
- Earnings Per Share (EPS): Rs1.85 (down from Rs3.40 in Q3 2023)
Outlook
Kohinoor Energy’s Q3 2024 financial performance reflects the impact of declining revenue, rising interest rates, and increased operational expenses. Despite cost reductions, the sharp drop in revenue outpaced the company’s efforts to control costs. Although the surge in other income provided some relief, it was insufficient to offset the overall decline in profits.
Looking ahead, the company will need to address its revenue challenges and manage rising expenses effectively to stabilize its profitability in the upcoming quarters.
