TAQA Group Reports AED 2.1 billion Net Income for Q1 2024

 Abu Dhabi National Energy Company PJSC (TAQA or the Company), one of the largest listed integrated utilities in Europe, the Middle East and Africa, reported its earnings for the period ending 31 March 2024. TAQA delivered a robust financial performance, bolstered by the recognition of contributions from Sustainable Water Solutions Holding Company PJSC (SWS Holding).

Financial highlights

• Group revenues of AED 13.7 billion, 5.3% higher than the prior-year period, due to the contribution from SWS Holding, which also increased adjusted EBITDA and net income.
• Adjusted EBITDA was AED 5.5 billion, 4.9% higher than the prior-year period.
• Net income (TAQA-share) was AED 2.1 billion, a decrease of AED 9.5 billion because of one-off items recognised in 2023. Net income, excluding these one-offs, increased by AED 0.1 billion, 6.9% higher than the prior-year period.
• Capital expenditure was AED 1.7 billion, 60.3% higher than prior year driven mainly by construction progress in the Mirfa 2 Reverse Osmosis (M2 RO) and Shuweihat 4 Reverse Osmosis (S4 RO) desalination projects.
• Free cash flow generation was AED 0.3 billion, AED 4.0 billion lower than the previous year, due to increase investments into Masdar to finance investment in 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 was AED 62.5 billion, up from AED 61.7 billion at the end of 2023, reflecting project debt assumed on the acquisition of SWS Holding and investment in expanding the Company’s desalination capacity with the development of Mirfa 2 Reverse Osmosis (M2 RO) and Shuweihat 4 Reverse Osmosis (S4 RO) desalination projects which are underway.

Strategic highlights:

• Acquisition of SWS Holding: During 2023, TAQA agreed to acquire 100% of SWS Holding from Abu Dhabi Power Corporation PJSC, TAQA’s majority shareholder. SWS Holding, with its predictable earnings and large regulated asset base, is highly complementary with TAQA’s existing business. Combining them 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. Whilst the majority of conditions relating to the transaction have been satisfied, certain procedural steps remain outstanding for legal completion to occur.  Under the terms of the transaction, the economic contributions from SWS Holding are to be assumed by TAQA from 1 January 2024 and are therefore reflected in its consolidated accounts for the first time.    
• The Amiral petrochemical complex: TAQA, together with JERA announced that they entered into a Power and Steam Purchase Agreement with Saudi Aramco Total Refining and Petrochemical Company (“SATORP”), a joint venture company owned by Saudi Aramco and TotalEnergies, to develop a greenfield industrial steam and electricity cogeneration plant. The plant will produce electricity and steam for the Amiral petrochemical complex to be developed in Jubail in the Eastern Province of the Kingdom of Saudi Arabia.
• Juranah Independent Strategic Water Reservoir Project in Makkah, Saudi Arabia: TAQA announced its participation in the winning consortium to develop a AED 1.5 billion Independent Strategic Water Reservoir project with a storage capacity of 2,000,000 m3 in Juranah (Makkah region). The consortium, which also includes Vision International Investment Company (Vision Invest) and Gulf Investment Corporation (GIC), signed project agreements with the procurer Saudi Water Partnership Company (SWPC). The Juranah ISWR-1 Project is the first of its kind in the Kingdom of Saudi Arabia under a BOOT (Build, Own, Operate, Transfer) model, reflecting active private sector involvement in essential water infrastructure development. The project aims to address municipal water demand across all the regions of the Kingdom and cater to the peak demand in Makkah and Madinah during the Hajj season.

Operational highlights

• Transmission network availability for power and water of 98.3%, compared to 98.1%, marginally higher versus the comparative quarter.
• Generation global commercial availability of 97.4%, compared to 98.8% in the comparative quarter, marginally lower due to both planned and unplanned outages across the UAE and international fleet.
• SWS asset availability of 96.1%, underscoring the robust performance of the assets accounted for by TAQA at the onset of 2024.
• Oil & Gas average production volumes decreased to 106.9 thousand barrels of oil equivalent per day (boepd), a decrease of 5.4% compared to Q1 2023. This decrease is mainly due to the natural decline in production and decommissioning activity associated with the Group’s late-life UK assets.

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.

The first quarter of 2024 marked yet another significant milestone for TAQA's commitment to expanding its international footprint. We joined forces with industry leaders JERA, SATORP, (a joint venture company owned by Saudi Aramco and TotalEnergies) committing to the development of a state-of-the-art power and steam cogeneration plant in Jubail, Saudi Arabia as well as being part of the consortium that won the Juranah project, to support water security in Makkah. 

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.