Acwa Power’s Q2 profit jumps 27% as revenue climbs amid new projects

Saudi Arabian utility company reports $104m in net profit for the period

A Saudi Acwa Power-generating windmill in Jbel Sendouq, on the outskirts of Tangier, Morocco. Reuters

Riyadh-based utility developer Acwa Power reported a 27 per cent increase in second-quarter profit on the back of higher operating income and revenue, as the company continues to sign up to new projects.

Net profit after zakat and tax attributable to equity holders of the parent for the three months to the end of June climbed to nearly 389.9 million Saudi riyals ($104m) compared with 307.8m riyals during the same period last year, Acwa Power said on Thursday in a statement to the Tadawul stock exchange, where its shares are traded.

Operating income during the period rose more than 2 per cent to 642m riyals, while revenue grew more than 3 per cent to 1.29 billion riyals.

The company recorded higher profit due to an "increase in the share of net income from equity-accounted investees, mainly on account of new projects that commenced operations subsequent to June 30, 2021", Acwa Power said.

Share in net income from equity-accounted investees during the period jumped 19 per cent to 169.6m riyals, according to the statement.

Impairment loss and other expenses dropped 46 per cent to 35.8m riyals.

Other income rose to 95.4m riyals in the second quarter, compared with 15.6m riyals during the same period last year, helping the company to boost profits.

Zakat and tax charge, on the other hand, increased during the reporting period.

Acwa Power operates in 13 countries across the Middle East, Africa, Central and South-east Asia. It has a portfolio of 67 assets with a total investment of $66.5bn, producing 42.7 gigawatts of power and 6.4 million cubic metres per day of desalinated water.

“The business environment in which we operate did not manifest any unexpected new turn of events or major shifts in the geopolitical or macroeconomic landscapes,” said Paddy Padmanathan, chief executive and vice chairman of Acwa Power.

“However, the continuing Russia-Ukraine war, the persistent increasing costs and a Covid-triggered supply-chain constraint out of China continued to demand notable effort from our teams across the organisation to navigate through the ensuing issues for our projects in advanced stages of their development.”

The company is in the process of bid preparation and submission for the competitive 500-megawatt solar project in Uzbekistan and 600,000 cubic metres per day Rabigh 4 independent water project in Saudi Arabia in response to requests for proposals put forward by the respective off-takers, he said.

The company is also “at the final stages of submitting our bid” for the development of the fully integrated utilities infrastructure at Amaala, the second mega-tourism project on the north-west coast of the country between Neom and the Red Sea Project, Mr Padmanathan said.

Saudi Arabia's sovereign wealth Public Investment Fund is the biggest shareholder in Acwa Power, with a 50 per cent stake. It also has seven other stakeholders, including the Saudi Public Pension Agency.

The company raised $1.2bn from its listing last year, making it one of the biggest share sales in the energy space after Saudi Aramco's record IPO on the Tadawul in 2019, which raised a record $29.4bn.

The company was this year selected as the preferred bidder to develop two solar photovoltaic plants in Indonesia, South-east Asia's largest economy.

The two projects are the Singkarak floating plant in Sumatra with a capacity of 50MW and another 60MW plant in Java.

“We are currently working with the relevant stakeholders to take these projects towards the final award stage," Mr Padmanathan said.

Acwa is also leading a consortium to develop a 1.1-gigawatt wind project worth $1.5bn in Egypt, and has teamed up with Oman’s OQ energy company to build a multibillion-dollar green hydrogen-based ammonia production unit in the sultanate. It is also developing other projects across the region.