Umeme Limited pointed to an increase in electricity sales and customer connections as the power distributor returned to year on year revenue and profits growth in 2021.
Revenue rose 13.5 per cent to Shs1.8 trillion helped by an increase in electricity sales and revenue from electricity distribution construction services, according to the companys’ earnings statement. In 2020, Umeme reported a fall in revenue of 6.5 per cent as income from electricity sales and construction services both declined.
Electricity sales by volume grew 9.6 per cent compared to 0.6 per cent in 2020 — revenue from electricity sales fell 3 per cent in 2020 — and was attributed to increased power consumption driven by an “improved economic environment following the lifting of restrictions.” In addition, the resumption of the government’s free connections program — the biggest contributor to construction services income — pushed the number of new customers to 129,511 compared to 57,000 the previous year.
Umeme’s gross profit rose to Shs642.2bn, up from Shs478.9bn a year ago and reversing an annual decline of 19.4 per cent. This was “on account of improved operational efficiencies and underlying distribution margins,” the statement said. The cost of sales rose 5.2 per cent to Shs1.2tn.
The company blamed its earnings decline in 2020 on a tricky “operating and regulatory environment”: power sales dropped as businesses suspended operations during the coronavirus pandemic lockdowns, amplifying the knockdown effects of the governments’ suspension of its free connections programme, a key source of construction revenue.
Operating costs, including foreign exchange losses, increased by 7.8 per cent in 2021, slower than the 8.5 per cent rise reported for the previous 12 months. This was largely due to a lower increase in repair and maintenance expenses. Administrations expenses, on the other hand, accelerated by 5.3 per cent versus a decline of 1.7 per cent in 2020 mainly because of inflationary pressures and “increased business operations in service delivery”.
Earnings before interest, taxes, depreciation, and amortization rose to Shs378.4bn. Operating profit increased to Shs213.5bn from Shs92,9bn a year earlier, rebounding from a 62 per cent decline in 2020.
Umeme said it will pay a full-year dividend of Shs54.1. It’s dividend for 2020 was Shs12.2 per share.
