Home Latest Insights | News Geregu Power Reports N36.2bn Pre-tax Profit For The First Nine Months of The Year

Geregu Power Reports N36.2bn Pre-tax Profit For The First Nine Months of The Year

Geregu Power Reports N36.2bn Pre-tax Profit For The First Nine Months of The Year

Geregu Power Plc, Nigeria’s first listed power generation company, has announced remarkable financial results for the first nine months of 2024, showcasing a significant increase in profitability.

The company reported a pre-tax profit of N36.2 billion, a 107% rise from the N17.4 billion recorded during the same period in 2023. This growth highlights Geregu Power’s strong operational performance despite industry challenges.

Financial Performance Breakdown

The company’s profit after tax stood at N24.1 billion, and when annualized, its projected profits could reach N32.1 billion, suggesting a compounded annual growth rate (CAGR) of 23% over the past five years. This marks an impressive increase from N16 billion in profits after tax recorded in 2023.

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Geregu Power’s revenue for the nine months reached N112.5 billion, reflecting a 102% year-on-year increase. The revenue was primarily driven by N71.4 billion in energy sales and N41.1 billion from capacity charges. The company also maintained a solid gross profit of N54.6 billion, despite inflationary pressures and rising costs, with gross margins exceeding 41%—though this was slightly below the historical margin of 50%.

Key Financial Highlights:

  • Revenue: N112.5 billion (+102%)
  • Gross Profit: N54.6 billion (+89.2%)
  • Operating Profit: N37 billion (+80.1%)
  • Pre-tax Profit: N36.2 billion (+107.4%)
  • Profit after tax: N24.1 billion (+111.9%)
  • EPS: N9.63
  • Cash Balance: N40.4 billion
  • Net Asset: N49.2 billion
  • Total Assets: N221 billion

Industry Influence and Growth Prospects

Geregu Power’s impressive growth can be linked to favorable developments in Nigeria’s electricity sector. Key reforms, such as the Nigerian Electricity Regulatory Commission (NERC) approval of higher tariffs in 2023, have improved revenue alignment with operational costs, enhancing profitability for power generation companies (GenCos) like Geregu. Stakeholders had expected additional tariff increases in 2024, though political and economic factors have stood in the way.

Furthermore, the government’s continued investments in grid infrastructure and privatization of critical power assets create additional opportunities for Geregu Power to enhance its capacity and further unlock growth potential.

Share Price Surge and Future Growth

Geregu Power’s share price has surged 188% year-to-date, underlining strong investor confidence. The stock currently has a price-to-earnings (P/E) ratio of 102x, positioning it as a high-growth asset. Despite operating at only 50% capacity due to grid constraints, the company’s doubling of profits signals significant growth potential.

With profits growing at a CAGR of 23%, investors are betting on the company’s ability to expand its earnings further. There are also indications that Geregu Power may pursue acquisitions to bolster its capacity, which could have a transformative impact on its revenue and profitability.

Geregu Power has maintained a consistent record of dividend payments, with an average payout ratio exceeding 100% over the last three years. This commitment, combined with its robust 2024 performance, has made the company’s stock particularly attractive to income-focused investors. The sustained strong performance is expected to support continued dividend payouts, further boosting investor confidence.

Outlook for the Final Quarter

Geregu Power projects a pre-tax profit of N16.8 billion and a profit after tax of N11 billion for the final quarter of 2024. If these targets are met, the company’s full-year pre-tax profit could rise to N53 billion, representing a 118% year-on-year increase. This forecast underscores the company’s potential for continued robust earnings growth, positioning it as a leading player in Nigeria’s evolving power sector.

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