Geregu Power's Q1 2025 financial results reveal a moderate downturn in key performance metrics, driven by a significant decline in revenue and rising expenses. The company's revenue plummeted by 37% year-on-year to N31.76 billion, likely due to reduced generation capacity, dispatch issues, or challenges with gas supply contracts.
Key Highlights
- Revenue Decline: Geregu Power's revenue declined by 37% year-on-year to N31.76 billion, driven by operational and structural pressures in the power sector.
- Cost Pressures: Cost of sales decreased by 10.3% to N19.76 billion, while administrative expenses inched upward to N2.53 billion, adding strain to the company's margin.
- Impairment Reversal: A notable bright spot is the impairment reversal on financial assets, which moved from a negative N3.97 billion to a positive N5.21 billion, indicating successful recovery of previously doubtful receivables.
- Rising Borrowings: The company's borrowings increased to N14.97 billion, leading to a significant spike in finance costs and a negative net finance cost of N1.66 billion.
- Declining Profitability: Profit before tax (PBT) declined to N13.01 billion, while profit for the period fell to N10.43 billion, a 27.8% decrease year-on-year.
Outlook
Geregu Power's Q1 2025 performance raises red flags on its key operational areas, including slumping revenues, rising finance costs, and strained profit margins. The company's high valuation, with a trailing Price-to-Earnings (P/E) ratio of over 273x, may not be justified by its current fundamentals.
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