Abu Dhabi’s TAQA posts $571.7 million net income in Q1 2024

The Abu Dhabi National Energy Company (TAQA), a prominent integrated utilities firm in Europe, the Middle East, and Africa, has released its earnings report for the period ending on March 31, 2024. The company showcased a robust financial performance, bolstered by the contributions of Sustainable Water Solutions Holding Company PJSC (SWS Holding).

Key financial highlights

• Group revenues reached AED13.7 billion ($3.7 billion), marking a 5.3 percent increase compared to the previous year. This growth was primarily driven by the inclusion of SWS Holding, which also led to higher adjusted EBITDA and net income.
• Adjusted EBITDA amounted to AED5.5 billion ($1.5 billion), representing a 4.9 percent rise compared to the previous year.
• Net income (TAQA-share) stood at AED2.1 billion ($571.7 million), showing a decrease of AED9.5 billion ($2.58 billion) due to one-off items recognized in 2023. However, excluding these one-offs, net income increased by AED0.1 billion, reflecting a 6.9 percent growth compared to the previous year.
• Capital expenditure amounted to AED1.7 billion, marking a significant increase of 60.3 percent compared to the prior year. This rise was primarily driven by progress in the construction of the Mirfa 2 Reverse Osmosis (M2 RO) and Shuweihat 4 Reverse Osmosis (S4 RO) desalination projects.
• Free cash flow generation reached AED3 billion, which was AED4 billion lower than the previous year. This decline was attributed to increased investments in Masdar for financing renewable energy projects, capital expenditure on the development of Mirfa 2 Reverse Osmosis (M2 RO) and Shuweihat 4 Reverse Osmosis (S4 RO) desalination projects, and working capital movements.
• Gross debt increased to AED62.5 billion from AED61.7 billion at the end of 2023. This rise reflected the project debt assumed during the acquisition of SWS Holding and investments in expanding the company’s desalination capacity through the Mirfa 2 Reverse Osmosis (M2 RO) and Shuweihat 4 Reverse Osmosis (S4 RO) desalination projects, which are currently underway.

Read more: ADNOC, TAQA to develop $2.4 billion UAE mega water project

Strategic highlights

• TAQA agreed to acquire 100 percent of SWS Holding from Abu Dhabi Power Corporation PJSC, TAQA’s majority shareholder, in 2023. This acquisition aligns with TAQA’s strategic objectives, as SWS Holding brings predictable earnings and a substantial regulated asset base. The integration of the two entities will create a vertically integrated player with strong capabilities in delivering high-quality water treatment solutions, as well as a shared commitment to operational efficiency and customer service excellence.
• TAQA, together with JERA, announced a Power and Steam Purchase Agreement with Saudi Aramco Total Refining and Petrochemical Company (SATORP) to develop a greenfield industrial steam and electricity cogeneration plant. This plant will provide electricity and steam for the Amiral petrochemical complex in Jubail, Saudi Arabia.
• TAQA participated in a winning consortium to develop the Juranah Independent Strategic Water Reservoir Project in Makkah, Saudi Arabia. This AED1.5 billion project aims to establish a water reservoir with a storage capacity of 2,000,000 m3 in the Juranah region. It is the first project of its kind in Saudi Arabia under a BOOT (Build, Own, Operate, Transfer) model, showcasing active private sector involvement in essential water infrastructure development. The project aims to address municipal water demand across all regions of the Kingdom and cater to peak demand in Makkah and Madinah during the Hajj season.

Operational highlights

• The transmission network availability for power and water stood at 98.3 percent, slightly higher compared to the previous quarter.
• Generation global commercial availability reached 97.4 percent, showing a marginal decrease compared to the previous quarter due to planned and unplanned outages across the UAE and international fleet.
• SWS asset availability was 96.1 percent, indicating a robust performance of the assets accounted for by TAQA at the beginning of 2024.
• Oil & Gas average production volumes decreased to 106.9 thousand barrels of oil equivalent per day (boepd), representing a 5.4 percent decrease compared to Q1 2023. This decline was primarily attributed to the natural decline in production and decommissioning activity associated with the Group’s late-life U.K. assets.

Significant contribution from SWS Holding

Jasim Husain Thabet, TAQA’s group chief executive officer and managing director, commented: “TAQA has made a strong financial and strategic start to 2024. We have delivered a strong operational performance in both power and water. Our strong performance was significantly bolstered by the contribution from SWS Holding. Integrating SWS Holding’s expertise in water treatment and reuse will enhance TAQA’s position as a vertically integrated utility leader. The acquisition also strengthens TAQA’s regulated asset base, securing an additional predictable stream of long-term earnings and positioning the company for an even more central role in underpinning water security at home and internationally. Efficient management of water will play a vital role in achieving the UAE’s net zero by 2050 target.

He added: “Through the investments we have made and as we continue to pursue other aspects of our 2030 growth strategy, TAQA remains committed to our ambition of being a champion of low-carbon power and water.

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