Dubai's Empower posts $45.5m first quarter net profit as demand for services grows

Revenues post 'exceptional growth' as new mixed-use projects join portfolio

The Empower district cooling plant at the Dubai International Financial Centre. The company said its first-quarter performance was driven by the rise in 'recurring and sustainable revenues'. Bloomberg

Emirates Central Cooling Systems Corporation, the Dubai utility known as Empower, has reported a Dh167.3 million ($45.5 million) profit in the first quarter, as demand grew for its services in line with the emirate's economy.

Revenue in the three months ended March rose 6 per cent to Dh494.27 million, from Dh466.27 million a year ago, the company said in a filing to the Dubai Financial Market, where its shares are traded.

Operating profit was up 8.2 per cent annually to Dh200.1 million, from Dh185.1 million a year ago. Net profit was down about 7.6 year-on-year from Dh181.3 million in the first quarter of 2022.

Empower said it posted “exceptional growth” as new mixed-use projects were added to its portfolio, and noted a surge in production and operational capacity.

This was driven by the rise in recurring and sustainable revenue resulting from the growth in various economic sectors and markets in Dubai, notably the real estate sector, which is the mainstay of the company's business.

“The results of the first quarter consolidate the company’s position on more than one level, including by confirming its leadership in the global district cooling markets, and highlighting its superior ability to meet the demand for district cooling services,” Ahmad bin Shafar, chief executive of Empower, said in a statement.

District cooling companies, growing at a rapid pace in the Middle East, deliver chilled water through insulated pipes to offices, residences and industrial buildings to run air conditioning systems.

Its benefits include reduced capital and operating costs, lower set-up costs, substantially lower electricity use and lower maintenance, and more sustainability as it enables the use of alternative and cheaper fuels, according to Empower's website.

In the first quarter, Empower entered into several exclusivity agreements, including concessions agreements with property development projects.

In February, it signed an agreement with the Dubai Maritime City to provide its projects district cooling services with a capacity exceeding 63,000 refrigeration tonnes. A similar agreement was signed with Sobha Real Estate in March to provide 17,000 refrigeration tonnes to the Sobha Hartland project.

Empower also signed agreements for several other buildings in parts of Dubai, including Business Bay, Jumeirah Village Circle, Dubailand, Dubai Studio City, the Dubai International Financial Centre, Jumeirah Lakes Towers and Barsha Heights, with the total cooling capacity of these agreements reaching 24,000 refrigeration tonnes.

It also started operating its new district cooling plant in Dubailand, with a total production capacity of 47,000 refrigeration tonnes, which will provide services to residents of the Dubai Land Residence Complex.

Those services come with “standards that exceed its global counterparts, regardless of the size, time or location”, Mr bin Shafar said.

Empower, which started trading on the DFM in November, sold two billion shares through its initial public offering, or 20 per cent of its share capital. It raised more than Dh2.6 billion from its offering, which drew strong demand from local, regional and international investors and was more than 47 times oversubscribed.

The UAE Strategic Investment Fund, Shamal Holding and the Abu Dhabi Pension Fund were cornerstone investors in the IPO, with a total commitment of up to Dh335 million.

“The [first-quarter] results also reinforce Empower's strong and effective presence and its capability to attract investors to the Dubai Financial Market, motivated by their confidence in the company's strong base to continue achieving growth in terms of sustainable revenue and profits,” Mr bin Shafar said.

Empower was established by decree as a joint venture in 2003 to provide energy through its various plants to Dubai's property sector.

It serves more than 110,000 corporate and individual customers in more than 1,400 buildings with a connected capacity of about 1.4 million refrigeration tonnes and a contracted capacity of about 1.5 million refrigeration tonnes, according to its website.