Rising natural gas cost pulls B Grimm’s 1Q results down 96% year-on-year

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B.Grimm Power Plc (BGRIM), one of Thailand’s leading power generators, on Friday reported a drop of 96 per cent in its first-quarter earnings due to a hike in the natural energy price, which affected electricity sales to industrial users.

The company booked a net profit for the first quarter of 2022 of 23 million baht, down from 611 million baht a year earlier. 

According to its management’s discussion and analysis, BGRIM’s natural gas costs nearly doubled to 10 billion baht in the first quarter given a surge in gas price to 442 baht per metric million british thermal unit (MMBTU).

Despite a sharp fall in earnings, BGRIM shares jumped by 3.15 per cent to 32.75 baht during the morning session. Since the Russia-Ukraine conflict disrupted commodity prices globally, BGRIM shares have been priced in from the impact. The stock fell over 20 per cent year-to-date.

BGRIM is the energy unit of Thailand’s oldest trading conglomerate B.Grimm Group, focusing on renewable energy. The company also renders electricity distribution, operations, and maintenance services to clients in Asia.

Unlike profits, BGRIM recorded a 41-per-cent rise in sales revenue driven by an increase in tariffs from the Electricity Generating Authority of Thailand, growing electricity volume in industrial users, as well as growths from solar, wind, and hydro projects.

Analysts are assessing further downside to BGRIM’s energy businesses as pressure from the Russia-Ukraine crisis still persists. According to Capital Nomura Securities, BGRIM’s results in the second would still see a drop from last year.

‘The main drawback remains increasing gas cost that would surpass an uptick in power tariffs,” analyst Sornchai Pitthayapong said.

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