Empower posts $64m second-quarter profit on growing economy and real estate sector

Growth driven by high occupancy rates in real estate projects

Empower's sustainable business model and rising demand from its customer base boosted its operations in the first half of 2023. Bloomberg

Emirates Central Cooling Systems Corporation, the Dubai utility known as Empower, has reported a Dh235.5 million ($64.1 million) net profit in the second quarter, underpinned by demand from growing economic activity and the real estate sector in the emirate.

Revenue in the three months to the end of June rose 6.2 per cent to Dh730.6 million, from the same period a year ago, the company said on Friday in a filing to the Dubai Financial Market, where its shares are traded.

Operating profit was up nearly 9 per cent annually to Dh276.6 million. Net profit attributable to equity holders of the company was down about 6 per cent year on year, from Dh250.4 million in the first quarter of 2022.

Earnings before interest, taxes, depreciation and amortisation (ebitda) for the quarter rose almost 7 per cent to Dh370 million during the reporting period.

For the first half of 2023, Empower's revenue grew more than 6 per cent on an annual basis to Dh1.22 billion, while operating profit climbed 8.7 per cent to Dh477.5 million during the reporting period.

Net profit in the six months to June stood at Dh402.8 million, from Dh431.6 million in the first half of 2022. Ebitda jumped 7.4 per cent to Dh654 million in the period.

Empower said its first-half growth was largely underpinned by Dubai's growing economic activities and the real estate sector, citing a sustainable business model and the rising demand from its diversified customer base that includes residential, commercial, hospitality, retail, entertainment and other segments.

This was mainly driven by high occupancy rates in existing real estate projects, as well as a significant increase in the number of large real estate projects added to its portfolio, it said.

“The results of the first half of 2023 are a realistic translation of the promises made by Empower to investors and shareholders," Ahmad bin Shafar, chief executive of Empower, said in the filing.

"We aim to maintain upward, thriving and sustainable operational and financial performance to bring significant benefits to our stakeholders and contribute to Dubai’s economy, its residents and various economic sectors."

The company in March said that it will pay a cash dividend of Dh425 million to its shareholders for the second half of last year.

Shares of Empower were down 2.6 per cent to Dh1.87 in midday trading on Friday on the DFM.

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.

The company was active in the first half of the year. In May, it acquired the right to operate five district cooling units of Dubai International Airport in a deal valued at Dh1.1 billion and with a total capacity of 110,000 refrigeration tonnes (RT).

It also previously announced a record 7.2 per cent increase in the volume of consumption of its district cooling services in the first half of 2023 compared with the year before.

The company had entered into several exclusivity agreements, including concession agreements with major real estate development projects, such as with Dubai Maritime City (DMC) and Sobha Real Estate to provide its projects district cooling services with capacities exceeding 63,000 RT and 17,000 RT, respectively.

During the period, Empower also began providing services to DMC by connecting the Anwa residential tower to its DMC district cooling plant.

It also started operations of a new district cooling plant in Dubailand, which has a capacity of 47,000 RT and will provide services to residents of the Dubai Land Residence Complex, and began upgrading its Jumeirah Beach Residence plant with modern technologies.

Empower also signed agreements for several other buildings in Dubai, including Business Bay, Jumeirah Village Circle, 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 RT.

"Empower continues to take steady and consistent steps toward expanding its operations and investments in its portfolio of assets and infrastructure," Mr bin Shafar said.

"This is to keep up with the growing demand in the district cooling market in Dubai and create investment opportunities with rewarding returns for investors and shareholders."