Stock/Gulf

Editorial Team

GULF posts a slight decline in core profit YoY in Q3/2022

GULF reported the financial results for Q3/22 with a core profit of 2.16 billion baht, a 6% decrease YoY due to the sharp rise in natural gas prices.

Gulf Energy Development Plc. (GULF) reported the financial results for Q3/22 with total revenues of 24.27 billion baht, representing an increase of 76% year-on-year (YoY). The growth was driven mostly by the revenue recognition of Gulf SRC’s (GSRC) units 2-3 with a total installed power generation capacity of 1,325 MW, which began commercial operation in Q4/21 and Q1/22, respectively.

Another factor is the increased revenue from the Borkum Riffgrund 2 offshore wind power project (BKR2) in Germany as a result of the average electricity prices, which almost doubled from €184/MWh to €328/MWh. Additionally, GULF recorded higher revenue from the 19 gas-fired SPPs due to higher electricity selling prices in tandem with the rise in natural gas prices.

In Q3/22, gross profit from sales was 4.46 billion baht, an increase of 55% YoY or 1.58 billion baht. However, gross profit margin decreased to 20.6%, down from 24.6% in Q3/21 due to the rise in average natural gas costs by 116% YoY.

GULF recorded a core profit of 2.16 billion baht in this quarter, a decrease of 126 million or 6% YoY, primarily due to the aforementioned spike in natural gas prices, along with the decrease in share of profit from INTUCH of 556 million baht (in Q3/21, GULF recognized dividend income from INTUCH of 1.66 billion baht, while in Q3/22, the company changed its accounting method for INTUCH to share of profit, which was recorded at 1.11 billion baht.

In addition, PTT NGD posted a loss of 221 million baht in this quarter due to lower fuel oil prices and higher gas prices (PTT NGD’s revenue structure is linked to fuel oil prices while costs are linked to gas prices). Nevertheless, GSRC recorded higher profit from the commercial operation of units 2-3 and BKR2 had improved performance this quarter, which resulted in the overall profit to weaken just slightly.

Net profit attributable to the parent company, which takes into account the impact of the FX rate, was 1.08 billion baht, a decrease of 32% YoY from 1.58 billion baht in Q3/22 as a result of the baht depreciation against the US Dollar which does not impact the cash flow and performance of the company.

As of September 30, 2022, GULF had a net interest-bearing debt to equity ratio of 1.96 times, a slight increase from 1.89 times at the end of June 2022. This was mainly due to the 35 billion in debentures that GULF issued in August 2022 for business expansion and partial loan repayment.

Ms. Yupapin Wangviwat, chief financial officer, GULF said this year’s performance is still in line with the target, despite the steep rise in natural gas prices. GULF received minimal impact as industrial customers account for only 13-14% of GULF Group's overall electricity sales volume.

Moreover, GULF invests in various types of businesses, both domestically and internationally, such as the renewable energy business overseas, including the BKR2 wind power project in Germany and solar farm projects in Vietnam, the gas-fired power generation business overseas, such as the Jackson Generation power project in the United States, as well as the investment in INTUCH Group. This is to diversify revenue streams, which results in stable earnings in the long term for GULF.

In Q4/22, earnings are projected to grow from GSRC unit 4 (662.5 MW), which began commercial operation on October 1, 2022, and the BKR2 wind power project, which will reach its peak season in the fourth quarter.

GULF will also record a full-quarter share of profit from the 3 wind power projects under Gulf Gunkul Corporation. For 2023 results, earnings are anticipated to increase significantly from the commercial operation of the Gulf Pluak Daeng (GPD) project, which is an IPP power plant with a total installed power generation capacity of 2,650 MW, where two units, totaling 1,325 MW, are scheduled to commence commercial operation. GULF also expects to record profit from the 1,200-MW gas-fired Jackson Generation power project in the United States from Q1/23 onwards.