Geregu Power Plc Posts Strong H1 2025 Earnings Despite Dividend Payout Pressure

Geregu Power Plc reported a profit after tax of ₦20.18 billion for the six months ended June 30, 2025, a slight increase from the ₦20.01 billion recorded in the same period of 2024.

Despite the profit growth, the company’s net cash position weakened due to the combined impact of dividend payments and debt servicing.

Equity Position Strengthened, But Margins Under Pressure

Total equity stood at ₦51.50 billion at the end of June 2025, down from ₦52.56 billion as of December 31, 2024. This was primarily driven by the ₦21.25 billion dividend payout to shareholders during the period, despite the retained profit inflow of ₦20.18 billion.

The company’s retained earnings dropped to ₦50.28 billion, down from ₦51.34 billion at year-end 2024.

Share capital remained unchanged at ₦1.25 billion, while the negative balance in other reserves held steady at ₦29.41 million, indicating no new reserve reclassifications or movements during the reporting period.

Operating Cash Flows Remain Positive

Geregu generated ₦29.63 billion in net cash from operating activities, representing a modest decline from ₦31.38 billion in FY 2024 and ₦35.81 billion in H1 2024.

The decline reflects significant cash absorption in trade and other receivables (₦29.62 billion), partially offset by inflows from trade and other payables (₦22.13 billion).

Income taxes paid during the period totaled ₦1.22 billion, down from ₦3.63 billion in the previous year’s half-year period, providing some relief to cash generation.

Investment Cash Flows Rebounded

Geregu reported a net cash inflow of ₦1.04 billion from investing activities in H1 2025, compared to an outflow of ₦32.99 billion in FY 2024.

This turnaround was largely due to reduced capital expenditure of just ₦1.16 billion during the period, significantly lower than the ₦41.28 billion spent in FY 2024.

Additionally, the company earned ₦2.23 billion in interest income, further supporting its investment cash flows.

Financing Activities Drag Liquidity

Cash flow from financing activities recorded a net outflow of ₦31.03 billion, reflecting dividend payments of ₦21.25 billion and repayment of long-term borrowings amounting to ₦14.71 billion.

Although Geregu raised ₦11.90 billion in new borrowings during the period, these inflows were insufficient to offset the total debt service and bond repayment obligations, including a ₦6.97 billion payment on bond principal and coupon.

Net Cash Decline and Liquidity Outlook

Net cash and cash equivalents decreased by ₦351.38 million, bringing the closing balance to ₦39.57 billion, down from ₦39.94 billion at the beginning of the year.

The marginal decline suggests that while operations remain profitable, the company’s liquidity position is under pressure from high capital returns and ongoing debt obligations.

Key Highlights:

Outlook

While Geregu Power Plc remains fundamentally strong, the company’s aggressive dividend policy and debt servicing costs are exerting pressure on liquidity. With a stable earnings base and reduced capital expenditure in H1 2025, management appears focused on cash preservation.

However, continued buildup in receivables and macroeconomic uncertainties in Nigeria’s power sector could pose future risks. Investors will be watching how Geregu balances shareholder returns with sustainable reinvestment and debt management in the second half of the year.