Saudi Arabia’s Acwa Power reports 16% rise in third-quarter profit

Chief executive says company will maintain an 'element of caution' in the short term owing to high interest rates and inflation

Acwa Power reported a 22 per cent increase in third quarter revenue. Ruel Pableo / The National

Saudi Arabia's private utility Acwa Power reported a more than 16 per cent increase in its third quarter net profit as a result of higher revenues as new projects came online and fees from development and construction management services increased.

Net profit after zakat for the three months to the end of September climbed to 397.94 million Saudi riyals ($106.08 million), the company said in a filing on Thursday to the Tadawul stock exchange, where its shares are traded.

Revenue during the period surged more than 22 per cent annually to 1.54 billion riyals, and operating profit rose nearly 25 per cent to 814.2 million riyals.

The company will maintain an “element of caution” in the short term, with high interest rates and inflation as well as geopolitical conflicts expected to continue into the next year, said Marco Arcelli, chief executive of Acwa Power.

“Although our business model largely allows us to rebalance these vibrations in the long run, timing differences in the short term are always possible due to delays in achieving some financial milestones,” he said.

Acwa Power, backed by the Public Investment Fund, operates in 12 countries across the Middle East, Africa, Central Asia and South-East Asia.

The company's portfolio comprises 77 projects in operation, advanced development or construction – with an investment value of $82.8 billion – and the capacity to generate 53.69 gigawatts of power and manage 7.6 million cubic metres of desalinated water a day.

Acwa Power now plans to expand into China, the world’s largest producer of renewable energy.

The company, which opened an office in the Asian country in 2008, will look into developing clean energy projects, with more focus on green hydrogen and desalination, Raad Al Saady, Acwa Power’s vice chairman and managing director, told The National last week.

Acwa Power’s net profit for the first nine months of 2023 grew to 1.08 billion riyals from 883.42 million riyals in the same period a year earlier.

Revenue during the same period jumped nearly 16 per cent to 4.29 billion riyals.

“We’re steadily progressing in achieving our 2023 targets with solid growth in projects achieving financial closes and others being commissioned and delivering energy and water to the end users,” said Abdulhameed Al Muhaidib, the company's chief financial officer.

“We hit our billion riyal bottom line in nine months, which is a fantastic achievement given the macroeconomic and geopolitical challenges surrounding us.”

Last week, Acwa Power signed agreements worth $746 million for the development of clean energy projects.

The deals included a $500 million initial agreement with EIG, an energy-focused institutional investor, to co-operate in sectors such as power generation, water desalination, and green hydrogen, with a focus on investing in projects in Gulf countries and Uzbekistan.

Acwa Power also signed funding agreements worth $246 million with the European Bank for Reconstruction and Development and the Opec Fund for International Development for the development of a 240-megawatt wind power project in Azerbaijan.