Gas cost cuts Transcorp Power’s operating margin by 700 bps

The operating margin of Transcorp Power, one of the power subsidies of Transcorp Group, declined by 700 basis points in nine months of 2024 on the back of the rising cost of natural gas due to increased power generation capacity.

According to the company’s third quarter (Q3) 2024 report, the operating margin declined to 36 percent from 43 percent due to the 203 percent year-on-year rise in the cost of natural gas and fuel of N118.4 billion from N39 billion in Q3 2023. Operating expenses like salaries and wages also rose to N824.1 million from N523.9 million.

Repairs and maintenance stood at N3.6 billion from N2.6 billion. Also, depreciation of property, plant, and equipment rose to N3.6 billion from N3.1 billion, Insurance increased to N284.6 million as other direct expenses stoood at N432.1 million.

Further analysis shows that revenue generated from customers increased by 153 percent to N233.6 billion, representing a year-on-year growth from N88.4 billion in Q3 2023.

Revenue generated from local customers increased by 81.9 percent to N184.4 billion from N77.2 billion, while revenue generated from international customers stood at N39.2 billion from N11.2 billion in Q3 2023.

Revenue on energy delivered rose by 90.2 percent to N149.4 billion from N56.5 billion. Also, revenue on capacity charged rose to N74.2 billion from N31.9 billion, with revenue on ancillary services standing at N13.5 million.

Cost sales/operating expenses rose to N127.1 billion from N45.9 billion in Q3 2023, while operating profit rose by 72.5 percent to N80.6 billion from N37.7 in Q3 2023 .

After-tax profit also surged to N58.4 billion from N20.4 billion. During the nine-month period, the company’s gross profit increased by 77.7 percent to N96.5 billion from N42.5 billion, while other operating income declined to N21.2 million from N492.9 million.

Read also: Transcorp Power grows Q3 profit by 198%

Impairment loss on financial assets grew by 176.8 percent to N4.3 billion from N264 million, while administrative expenses under its operating profit increased to N11.6 billion from N5.1 billion in Q3 2023.

The company’s profit for the year increased by 186 percent to N58.4 billion from N20.4 billion, while profit before tax surged by 198 percent to N81.1 billion from N27.3 billion in Q3 2023 while income tax expenses rose to N22.7 billion from N6.8 billion.

Finance income rose to N4.9 billion from N1.9 billion while finance cost increased to N7.9 billion from N4.9 billion and Net finance cost reduced by 95 percent to 538.9 million from N10.4 billion in Q3 2023.

The company’s total assets increased by 62 percent to N362.5 billion from N223.4 billion, while shareholders’ funds grew by 82 percent to N105 billion from N57.9 billion in Q3 2023.