x Abu Dhabi, UAESaturday 22 July 2017

Tabreed posts a cool profit in quarter

Net profits at Tabreed rose by nearly a third to Dh57.9 million during the second quarter as revenues from chilled water climbed and funding costs dipped.

Net profits at Tabreed rose by nearly a third during the second quarter as revenues from chilled water climbed and funding costs dipped.

The district cooling company based in Abu Dhabi yesterday reported profits of Dh57.9 million (US$15.7m), up 32 per cent from Dh43.8m in the same period last year.

"The performance was driven by the core of our business," said Sujit Parhar, the chief executive of Tabreed. "Over the last two years we have done a lot of new plants and they are now delivering profitability."

It delivered a chilled-water plant at the UAE University campus in Al Ain in the second quarter, taking its total number to 59 across the GCC.

Profits from chilled water operations rose by 20 per cent to Dh155.5m in the first half of the year.

Tabreed is moving its focus primarily to chilled water as it phases out non-core parts of its business, such as building insulated pipes. As a result, revenue declined by 3 per cent to Dh515.7m in the first half of the year.

The firm has returned to an upward path after completing a refinancing in April last year of Dh2.63 billion in debt amassed during the property downturn.

Tabreed's financing costs have dropped as a result of the restructuring, falling by a third to Dh87.2m during the first half of the year. Cuts in spending also helped strengthen the firm's bottom line.

Tabreed's future growth prospects are closely tied to the increase of infrastructure spending in Abu Dhabi and the rest of the GCC.

But Mr Parhar believes building projects are on a more sustainable footing than before the downturn.

"We are working on numerous expansions of existing plants and new facilities," he said.

"The growth in the market now is more sustainable with no speculative building and we will grow in tandem with that."

The company is fully funded until the end of the year.

From next year, Tabreed plans to support itself from returns linked to long-term contracts for the plants it operates.

Last year's restructuring involved Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, investing Dh3.1bn in the firm in return for a larger stake. Mubadala now owns 27.3 per cent of Tabreed.

Tabreed's shares rose 3.1 per cent to Dh1.30yesterdayon the Dubai Financial Market.

tarnold@thenational.ae