Geregu Power Plc Q2 - Delivers Strong Revenue Growth Amid Mounting Cost Pressures

Geregu Power Plc reported a notable 85% year-on-year revenue growth for the three months ended 30 June 2025, reaching ₦55.87 billion compared to ₦30.25 billion in Q2 2024. This reflects increased generation output and higher dispatch levels, underscoring the company’s operational leverage in Nigeria’s power generation space.

Key Highlights:

• Robust Revenue Expansion: For H1 2025, revenue climbed to ₦87.63 billion, up from ₦80.68 billion in H1 2024. The company continues to benefit from improved grid stability and increased energy demand.
• Rising Input Costs Impact Gross Margins: Cost of sales surged 87% in Q2 2025 to ₦32.13 billion (vs. ₦17.18 billion in Q2 2024), keeping gross profit growth slightly more moderate at 82% year-on-year. This signals pressure from input costs, likely due to gas supply contracts and maintenance activities.
• Significant Impairment Charges: The quarter saw a sharp spike in impairment loss on financial assets to ₦6.08 billion from ₦2.05 billion in Q2 2024. This raises concerns around receivables quality or exposure to systemic payment delays in the sector.
• Strong Operating Profit Despite Challenges: Operating profit more than doubled to ₦15.02 billion in Q2 2025, and ₦29.69 billion for H1 2025—reflecting effective cost controls outside of direct operating expenses.
• Turnaround in Net Finance Position: Geregu posted a net finance income of ₦2.17 billion in Q2 2025, reversing a net finance cost of ₦6.81 billion a year earlier. This improvement is likely tied to refinancing activities or improved cash management.
• Bottom Line More Than Doubled: Q2 2025 profit after tax stood at ₦9.75 billion, up 76% YoY. H1 profit was relatively flat at ₦20.18 billion compared to ₦20.01 billion in the prior period, due to a ₦6.13 billion tax expense and impairment drag.
• Earnings per Share (EPS) Strengthened: Basic and diluted EPS rose to ₦3.90 in Q2 2025 (vs. ₦2.22 in Q2 2024), reflecting the improved profitability base.

Balance Sheet Observations:

• Receivables Swell: Trade and other receivables increased to ₦150.56 billion (from ₦121.82 billion in Dec 2024), suggesting a growing credit exposure—likely to the bulk buyer (NBET) or distribution companies.
• Leverage Metrics Remain High: Total borrowings and bond payables stood at ₦62.75 billion (₦46.75 billion current + ₦15.99 billion non-current), maintaining a leveraged capital structure, though manageable due to positive operating cash flow.
• Equity Base Slightly Lower: Retained earnings dipped marginally, with total equity at ₦51.50 billion, compared to ₦52.56 billion at year-end 2024. The actuarial loss remained unchanged.

Outlook:

Geregu Power’s strong revenue trajectory underscores its operational efficiency and strategic grid positioning. However, elevated impairment provisions and growing receivables signal sector-specific risks tied to liquidity challenges in the Nigerian electricity market. Investors should monitor credit risk trends and government payment interventions closely.

Further refinancing, better receivables recovery, and capacity optimization will be critical to sustaining earnings momentum into the second half of the year.