Chilime Hydropower Posts Profit Decline in Q3 Despite Strong Revenue Growth, Cost Pressure Weighs on Earnings

Chilime Hydropower Company Limited has reported a mixed financial performance for the third quarter of fiscal year 2082/83, where revenue growth remained strong but profitability declined compared to the previous year. The results indicate that while the company continues to generate stable income from electricity sales and investments, rising costs and operational pressures have weighed on net earnings.

During the review period, the company recorded total revenue of NPR 823.66 million, an increase from NPR 824.90 million in the corresponding period last year, reflecting relatively stable income despite hydrological challenges. According to the management, electricity sales declined marginally by around 0.15% due to lower water flow in rivers, which directly impacted power generation and supply. This highlights the inherent vulnerability of hydropower projects to seasonal and environmental conditions.

Despite this, the company managed to maintain a strong gross profit of NPR 669.99 million. However, rising expenses significantly affected overall profitability. Royalty expenses, administrative costs, employee benefits, and depreciation charges all increased during the period. In particular, employee-related costs rose following revisions in insurance coverage for staff, while overall operating expenses increased by more than 10% compared to the previous year.

Operating profit stood at NPR 511.52 million, lower than the NPR 546.62 million recorded last year. This decline reflects the impact of higher cost structures, even though the company maintained solid revenue generation. On the other hand, financial income showed notable growth, rising to NPR 102.80 million, supported by increased interest earnings from short-term lending to subsidiaries and fixed deposits.

After accounting for expenses, tax, and other provisions, the company posted a net profit of NPR 456.99 million, down from NPR 514.81 million in the previous year. This decline suggests that cost escalation has outpaced revenue growth, leading to pressure on the bottom line.

From a balance sheet perspective, the company remains financially strong. Total assets stood at NPR 11.91 billion, while total equity reached NPR 11.47 billion, indicating a robust capital base. The company maintains significant investments in subsidiaries and associates, which continue to contribute to its overall financial stability.

Earnings per share (EPS) for the period stood at NPR 6.42 (annualized), compared to NPR 7.82 in the previous year, reflecting reduced profitability. The net worth per share declined slightly to NPR 121, while the price-to-earnings (P/E) ratio increased to 77.12 times, suggesting that the stock may be trading at a relatively high valuation compared to its earnings.

Management has also highlighted that dividend distribution is underway as per the decision of the recent annual general meeting, including bonus shares and cash dividends. The company continues to maintain steady cash flow, which is being utilized for dividend payments, new project development, and operational needs.

Looking ahead, the company faces several challenges, including hydrological risks, rising financing costs, and delays in regulatory approvals for new hydropower projects. Ongoing projects such as Seti River-3, Budhigandaki Prok, and Chumchet Syarkhola hydropower projects are in different stages of development, but progress depends heavily on power purchase agreements (PPA) and infrastructure readiness.

Overall, Chilime Hydropower’s third-quarter performance reflects a stable but pressured financial position. While its revenue base remains strong and diversified through investments, increasing operational costs and external risks continue to challenge profit growth. The company’s future performance will largely depend on improved cost management, favorable hydrological conditions, and timely execution of its upcoming projects.