Pakistan’s largest Independent Power Producer, Hub Power Company Limited, reported a slight HUBCO profit decline in the third quarter of fiscal year 2025–26, as higher taxation and reduced revenues offset gains from operations and other income.
According to a notice submitted to the Pakistan Stock Exchange on Wednesday, the company posted a consolidated profit of Rs12.13 billion for the quarter ending March 31, 2026. This reflects a nearly 3 percent drop compared to Rs12.48 billion recorded in the same period last year.
Earnings and Dividend Announcement
The HUBCO profit decline also impacted earnings per share (EPS), which fell to Rs8.33 from Rs8.51 in the corresponding period of the previous year.
Despite the dip in profit, the company announced a strong interim dividend. HUBCO declared a cash dividend of Rs5 per share (50 percent) for the third quarter. This comes in addition to the earlier interim dividend of Rs10 per share (100 percent), signaling continued returns for shareholders.
Revenue and Profit Margins Under Pressure
The HUBCO profit decline comes amid a reduction in revenue from contracts with customers. The company’s consolidated revenue dropped nearly 4 percent to Rs16.5 billion in 3QFY26, compared to Rs17.1 billion in the same period last year.
Meanwhile, the cost of revenue saw a modest decline of 2 percent, reaching Rs9.86 billion. However, the decrease in costs was not enough to offset the drop in revenue.
As a result, HUBCO’s gross profit fell by 5 percent to Rs6.6 billion. The profit margin also slightly narrowed to 40.1 percent, compared to 40.9 percent in the previous year.
Strong Growth in Other Income
Despite the HUBCO profit decline, the company recorded a significant increase in other income. This segment surged by nearly 146 percent, reaching Rs3.96 billion compared to Rs1.61 billion last year.
This sharp rise provided a cushion against declining revenues and highlights the company’s diversified income streams.
Operational Performance Improves
HUBCO’s core operations showed resilience during the quarter. Profit from operations increased by 18 percent to Rs9.85 billion, reflecting improved efficiency and cost management.
The company also benefited from a reduction in financial expenses. Its cost of finance dropped by over 28 percent to Rs2.1 billion, easing pressure on overall profitability.
Additionally, the company earned Rs11 billion from its share of profits in associates and joint ventures, marking an 8 percent increase. These gains contributed positively despite the overall HUBCO profit decline.
Pre-Tax Profit Rises Sharply
Interestingly, HUBCO’s profit before taxation increased by 20 percent to Rs18.8 billion. This indicates strong underlying performance before the impact of taxation.
However, the significant rise in taxes reversed much of this gain, leading to the final HUBCO profit decline for the quarter.
Tax Burden Weighs on Bottom Line
One of the key reasons behind the HUBCO profit decline was a sharp increase in tax expenses. The company paid Rs6.7 billion in taxes during the quarter, representing a massive 127 percent rise compared to the previous year. This surge in taxation significantly impacted net profitability and offset improvements in operational and financial performance.
Analysts note that rising tax burdens remain a major concern for companies operating in Pakistan’s energy sector. The latest financial results present a mixed picture for investors. While the HUBCO profit decline may raise concerns, strong operational growth, higher other income, and reduced finance costs indicate underlying stability.
The continued dividend payouts also suggest confidence from management in the company’s financial health. However, the rising tax burden and declining revenues could pose challenges in the coming quarters if not addressed.
Energy Sector Challenges Continue
The performance of HUBCO reflects broader challenges faced by Pakistan’s power sector. Issues such as regulatory pressures, fluctuating demand, and financial constraints continue to affect profitability.
Despite these challenges, HUBCO remains a key player in the country’s energy landscape. Its diversified operations and strategic investments provide some resilience against sector-wide difficulties.