Sri Lanka's Hemas Power Earnings up on Hydro Power

29th July 2010, www.lankabusinessonline.com

Sri Lanka's Hemas Power said net profit for the June 2010 quarter shot up 967 percent to 80 million rupees from a year ago on a sharp increase in earnings from hydropower.

Sales of the company, a unit of the Hemas Holdings group, fell five percent to 729 million rupees owing to lower thermal power revenue, a stock exchange filing said.

"The reduction arose manly from an 11 percent reduction in revenue at Heladhanavi," Hemas Power managing director Kishan Nanayakkara said.

"However, the excellent performance of the hydropower sector reflecting a 405 percent increase in revenue between comparative quarters helped to nullify this impact to some degree."

Revenue from thermal power fell to 669 million rupees in June 2010 from 755 million the year before while revenue from hydro power rose to 53 million from 11 million rupees.

Profit from thermal power rose to 42 million from seven million rupees while profit from hydro power shot up to 40 million from six million rupees a year ago.

Nanayakkara said the revenue reduction at Heladhanavi stemmed from a tariff cut and lower power generation owing to a

maintenance overhaul.

"Almost half of our net profits for the quarter derived from the hydropower sector," he said.

"Though hydropower is seasonal, the fact that it now influences our net profits considerably signifies the positive impact of

our effort to spread the portfolio balance between the hydropower and thermal sectors."

Lower finance costs at the Heladhanavi plant and the interest income earned from investments also helped to increase the

company’s profits.

Nanayakkara said the firm's Giddawa Hydro Power plant made a net profit of 16.0 million rupees for the quarter and its Upper

Agra Oya Hydro Power plant a net profit of 25.0 million rupees.

"The power generation at both hydropower plants was considerably higher than the anticipated generation levels during the

quarter."

The firm is building another hydro power plant called the Magalganga project.

"We anticipate that the forthcoming quarter also to be a reasonably good one although our two hydropower plants will move in

to the dry-season until the forthcoming North-East monsoon season which begins in October or in November," Nanayakkara said.