x Abu Dhabi, UAEMonday 22 January 2018

Mubadala rebounds to Dh851.5 million profits

Mubadala Development posted a more than four-fold rise in operating income in the first half of the year.

Mubadala Development, which owns Masdar and has investments globally, reported strong results for the first half of this year. Karim Sahib / AFP
Mubadala Development, which owns Masdar and has investments globally, reported strong results for the first half of this year. Karim Sahib / AFP

Mubadala Development rebounded to profit in the first half of the year as the company’s flagship businesses shipped more microchips around the world and oil output increased.

Slimmer losses on financial investments and smaller impairment losses also bolstered performance for Mubadala, a strategic investment company owned by the Abu Dhabi Government.

Net profit reached Dh851.5 million (US$231.8m) during the period after a loss of Dh1.2bn in the first half of last year.

“Against a backdrop of global economic volatility, our interim financial results demonstrate ongoing delivery against our mandate,” said Khaldoon Khalifa Al Mubarak, the chief executive and managing director of Mubadala.

Revenues rose 18 per cent to Dh16 billion compared to Dh13.5bn for the first half of last year. Operating income jumped more than fourfold to Dh2.2bn from Dh402m in the same period of last year.

Key to the stronger performance in the first half of this year was a rise in activity by GlobalFoundries, the semiconductor maker that Mubadala owns through its subsidiary, Advanced Technology Investment Company.

So far this year the company has shipped nearly half a million high-k metal gate wafers, far more than any other foundry and cementing its position as the second-largest dedicated semiconductor foundry in the world. It also began production at its plant in New York state, run by a 1,300-strong workforce.

Within oil and gas, Mubadala Petroleum’s South East Asia business continued to grow with higher than expected oil production in Thailand from the Jasmine Field. Plans were also finalised for the development of the Manora Field.

Founded a decade ago as an investment vehicle of the Abu Dhabi Government, Mubadala has sought to diversify the emirate’s investment portfolio by buying stakes in global giants such as General Electric and AMD, as well as local ventures including Emirates Aluminium (Emal).

The latest results point towards a turnaround for Mubadala after volatility in global markets squeezed the value of its investments, causing a full-year loss of Dh4.2bn last year.

Losses on financial investments were reduced to Dh771.6m in the first half of the year, down from Dh929.3m in the year-earlier period. Impairments on property, plants and equipment shrank to Dh9.4m compared to Dh353.8m during the same period of last year.

The results also indicate Mubadala’s increasing focus on industries outside of oil and gas is bearing fruit.

Strata Manufacturing, Mubadala’s aerospace components manufacturing business, added to its order book by winning a contract from Sabca, the Belgian aerospace company, to make flap-track fairings for the Airbus A350 XWB.

Strata Manufacturing already makes similar components for Airbus’s A330, A340 and A380 aircraft. Other strands of Mubadala’s aerospace business also performed well. SR Technics signed an engine maintenance service agreement withSpiceJet, while Abu Dhabi Aircraft Technologies sealed a seven-year agreement with Ethiopian Airways for its Boeing 737NG fleet.

In communications technology, Yahsat, Mubadala’s satellite project business, launched its second satellite, Y1B, to provide government and commercial applications.

Etisalat Nigeria, which is 30 per cent owned by Mubadala, grew its subscriber base to 13.1 million in the first half of the year from 10.7 million.

Reflecting Mubadala’s continuing focus on adding to its investment portfolio, the company’s asset base rose 10 per cent to Dh195bn during the first half. In March, it struck a $2bn investment deal with Brazil’s EBX Group, a diversified company with interests in oil and gas, gold and other sectors.

“We continue to support Abu Dhabi’s economic diversification through investments in priority sectors, the development of social infrastructure, and the generation of economic returns for our shareholder,” said Mr Al Mubarak.

Mubadala’s total equity rose by 18 per cent from Dh106bn at the end of last year to Dh125bn at the end of June, mainly due to additional cash contributions from the Abu Dhabi Government. It injected Dh17.8bn into Mubadala during the first half of the year as part of a five-year plan for the company, agreed by the Executive Council at the end of last year.