Geregu Power Plc is setting some lofty goals for the third quarter of 2024. The company expects its profit after tax to skyrocket to a whopping N9.9 billion, a staggering 148% increase compared to the N3.98 billion net income it recorded in Q3 2023. Talk about ambition!
Revenue Riding High
According to Geregu’s cash flow forecasts, the company anticipates raking in a massive N42.5 billion in revenue during Q3 2024. That’s a substantial 102% year-over-year jump from the N21.05 billion it brought in during the same quarter last year. This projected revenue surge is being fueled by an expected cash receipt of N15.8 billion from energy and capacity charges – a significant chunk of the company’s total revenue stream.
To put things in perspective, throughout the entire year of 2023, Geregu recorded a total receipt of N31.1 billion from capacity charges alone.
Costs Going Up, But Profits Still Soaring
While Geregu anticipates its cost of sales to spike by 112% year-over-year to N21.9 billion (up from N10.3 billion in Q3 2023) due to rising costs of LNG supply and transportation, the company’s projected revenue growth is expected to translate into a robust gross profit of N20.6 billion. That’s a 92% year-over-year increase from the N10.7 billion gross profit recorded in Q3 2023.
Administrative expenses are also projected to climb by 74.8% year-over-year to N4.9 billion (up from N2.8 billion in Q3 2023). Even with these increased costs, Geregu is forecasting a pre-tax profit of N15 billion for Q3 2024 – a remarkable 156% year-over-year growth compared to the N5.9 billion pre-tax profit it recorded in Q3 2023.
Cash Flow and Financing
Geregu is projecting a net cash flow of N2.3 billion from its operating activities during the quarter. However, the company is also anticipating having to shell out N5.02 billion in interest payments for term loans and bonds.
Q1 2024 Performance Sets the Stage
Geregu Power’s impressive financial performance in the first quarter of 2024 has set the stage for the projected Q3 2024 growth. The company posted a revenue of N50.4 billion, reflecting a 254% year-over-year increase from Q1 2023. Additionally, its profit after tax soared to N14.46 billion, marking 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, an 84% increase from N50.5 billion as of FYE 2023, reflecting higher debts incurred by GENCOs in Nigeria. However, Geregu’s accounts also showed a 35% increase in payables to gas suppliers, with a gas account payable of N63.3 billion, up from N46.7 billion as of FYE 2023.
Geregu Power Plc is one of the largest power generation companies in Nigeria, with an installed capacity of 435MW from its gas-fired power plant in Ajaokuta, Kogi State. The company was acquired in 2013 by billionaire Femi Otedola’s Amperion Power Distribution Company, which holds an 80% stake while the Nigerian government retains 20%. Geregu has invested over $550 million to date in transforming and upgrading its power plant, with plans to further increase generation capacity to 1,300MW pending resolution of issues with the federal government.
