Kot Addu Full-Year Profit Increases 20% on Lower Finance Costs

Kot Addu Power Co., Pakistan’s biggest electricity producer, reported a 20 percent increase in full-year profit because of lower finance costs.

Net income climbed to 7.35 billion rupees ($71 million), or 8.35 rupees a share, in the 12 months ended June 30 from 6.1 billion rupees, or 6.90 rupees, a year earlier, the Lahore-based company said today in a filing to the Karachi Stock Exchange. Sales fell 2.8 percent to 97.7 billion rupees.

The company’s interest costs fell to 8 billion rupees from 9.8 billion rupees a year earlier, according to the statement. Kot Addu, which purchases fuel from Pakistan State Oil Co. to run its generators, reduced its credit dependence on the nation’s biggest fuel retailer and moved to borrowing from banks, said Zoya Ahmed, an analyst at Karachi-based brokerage BMA Capital Management Ltd.

“The company effectively skewed its borrowings toward banks rather than standing payables against Pakistan State Oil that offer higher rates and charges a credit on Kot Addu’s payables,” said Ahmed, who has a buy rating for Kot Addu stock.

Kot Addu plans to pay a final cash dividend of 4.5 rupees a share.

The company owes Pakistan State Oil about 28 billion rupees as of March 31, Ahmed said. Kot Addu operates a 1,600 megawatt plant that can use furnace oil, natural gas and diesel to generate electricity, which is sold to the state-run Water & Power Development Authority.

Kot Addu rose 1.3 percent to 59.46 rupees at the end of trade in Karachi. The stock has climbed 20 percent this year, compared with a 33 percent gain in the benchmark KSE100 Index.

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