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Geregu Power Plc, a leading power-generating company majority owned by Nigerian billionaire Femi Otedola, reported a profit of N20.55 billion ($47.32 million) at the end of its 2021 fiscal year, driven by a double-digit percent increase in its revenue.
Geregu Power, which began operations in 2007, is a spin-off subsidiary of the now-defunct Power Holding Company of Nigeria. The power-generating company is now 80-percent owned by Otedola through one of his companies, Amperion Power Distribution Company.
It reported profits of N20.55 billion ($47.32 million) in 2021, which is 45.5-percent higher than the N14.13 billion it reported as profit in 2020. This is despite disruptions in the Nigerian power sector that caused a surge in the costs of power-generating firms in the nation.
The revenue increase from N53.67 billion ($123.6 million) to N70.97 billion ($163.4 million) was faster than direct production costs, and the improvement in energy sales during the review period from N34.84 billion ($80.2 million) to N45.7 billion ($105.23 million) can be attributed to the strong demand and increased output.
Figures contained in the group’s 2021 financial results revealed power output has consistently improved year-on-year over the last five years, demonstrating increasing efficiency and better utilization of its power plants.
Together with robust demand, this aided topline growth, which saw revenue climb at a compound annual growth rate (CAGR) of 14 percent over the previous five years and an increase in the EBITDA margin from 41 percent in 2017 to 48 percent in 2021.
The board of directors of Geregu declared a dividend of N12.3 billion ($28.4 million) as a result of the company’s good financial performance, down from N37.5 billion ($86.7 million) in 2020.
Since its shares were listed six days ago on the Nigerian Exchange, Geregu’s market capitalization has increased by more than $120 million, pushing its valuation above N300 billion ($695 million), as both retail and institutional investors competed to buy shares of the top power-generating company.
While highlighting its strong performance as it has seen consistent improvement in power output over the five-year period, indicating increased efficiency and improved utilization of its power plant, Vetiva Research, a division of the Lagos-based financial services company Vetiva, disclosed that the company’s shares could increase from their current listing price of N100 ($0.231) to N131 ($0.303).
