Profits at the Abu Dhabi-based district cooling company Tabreed rose by more than a fifth during the first three months of the year as it reduced costs and benefited from the completion of delayed housing schemes in Abu Dhabi.
Net profits stood at Dh58.2 million between January and March, a 22 per cent increase on the same period the previous year as it cut finance costs by 15 per cent.
At the same time company revenues rose by a more modest 4 per cent to Dh227.2m as Tabreed added 16,800 refrigerated tonnes of new connections to customers across the GCC.
Capacity in the UAE rose 3 per cent to reach 652,900 refrigerated tonnes during the quarter, after Tabreed connected eight new towers on Reem Island in Abu Dhabi including Aldar’s Gate Towers scheme.
“Tabreed’s performance in the first quarter was a result of connections made in Abu Dhabi’s Reem Island. Through its subsidiary company, Tabreed is one of the main providers of district cooling on Reem Island and the company expects to continue to benefit as new projects come online on the island,” said Jasim Husain Thabet, Tabreed’s chief executive.
“In general, we are now experiencing increased interest from developers in both Dubai and Abu Dhabi,” he added.
Like many district cooling companies in the UAE, Tabreed expanded rapidly during the property boom, building plants to cater to property developments which were developed off plan. When the global financial crisis hit in 2009 and property development ground to a halt, it was left with a gap in its income and soaring debts, prompting the company to recapitalise.
“Tabreed typically makes around 70 per cent of its unit revenues from new connections and only 30 per cent from people paying their cooling bills,” said Sanyalak Manibhandu, senior analyst at NBAD Securities. “By implication Tabreed will see more revenue growth when the company connects new buildings than when consumers increase consumption.
“However, although Tabreed provides district cooling for the Dubai Metro, it tends not to have many contracts with new gated communities in Dubai and so we do not predict that the company will benefit too much from the revival in the Dubai property market,” he added.
He expects the company to reap the benefits of investments made by its associates in Qatar and Saudi Arabia in the year ahead.
lbarnard@thenational.ae
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