Debt cools Tabreed's profit rise

Tabreed's third-quarter profits increased by more than half in a boost for the district cooling company as it persists with restructuring Dh3.5 billion (US$953 million) of debt.

The improvement in performance comes as Tabreed prepares to award contracts for eight plants to serve the Dubai Metro line.

"The changes we put in place in 2009 to improve performance, increase profitability and maximise returns are being demonstrated this year and enabling us to generate stronger returns," said Khaled al Qubaisi, the managing director of Tabreed.

The company's net profits rose to Dh36.3m for the September quarter, compared with Dh23.5m for the same period last year, according to results from the firm yesterday. Helping to generate profits were the completion of five new plants and two further expansion projects across Abu Dhabi, Dubai, Ras al Khaimah and Fujairah.

The results signal another positive step for Tabreed in a steady turnaround from a challenging last year. A rapid decline in the property sector deprived the company of new buildings in large-scale developments requiring cooling.

Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, owns a 16.7 per cent stake in Tabreed and intervened to offer bridging finance after the company racked up losses last year. The $354m financing was to help the company cover its needs while it completed a recapitalisation plan.

Tabreed is in the process of negotiating restructuring of its debts with creditors to put its business on a more sustainable footing and free up long-term capital for expansion.

"Tabreed may be on the path to a gradual recovery but what remains to be resolved is the overall debt situation," said Haissam Arabi, the chief executive of Gulfmena Alternative Investments.

The company still has short-term debt obligations of Dh4.8bn, Mr Arabi said.

"Our focus over the past 18 months has been on our core business of chilled water and today's results demonstrate improved operational efficiencies and performance," said Sujit Parhar, the chief executive of Tabreed.

Tabreed now has three plants and two expansions under construction. In May, it was given approval from shareholders to raise Dh4.2bn from bonds and restructure two sukuk as part of the company's recapitalisation programme.

Tabreed is raising fresh liquidity to plug the gap between the short-term financing liabilities it has accumulated to fund its growth, and its long-term receivables from the projects it has already executed.

Net profit for the first nine months of this year more than doubled to Dh115.7m from Dh53.7m in the same period last year.

This article has been amended from the original in which the opening paragraph incorrectly stated Tabreed's earnings.