x Abu Dhabi, UAEThursday 27 July 2017

Tabreed stays cool to reap hot profit

Tabreed's fourth quarter net profits more than doubled i as its revenues rose after building 11 new cooling plants.

Tabreed built 11 water cooling plants last year, eight for the Dubai Metro Green line. Dan Kitwood / Getty Images
Tabreed built 11 water cooling plants last year, eight for the Dubai Metro Green line. Dan Kitwood / Getty Images

Tabreed more than doubled fourth-quarter profits in a significant turnaround, as the Abu Dhabi utility added more cooling capacity to developments that included the Dubai Metro.

Tabreed has moved its business on to a sustainable footing after last year restructuring debt accumulated during the property downturn.

"Tabreed has a solid fundamental business model driven by its core chilled-water business, underpinned by its strict cost discipline and continuously improving organisational efficiencies," said Sujit Parhar, the chief executive.

Quarterly profits rose to Dh52.9 million (US$14.4m) from Dh21.1m in the same period a year earlier, it said yesterday. The firm's full-year net profit rose 34 per cent to Dh182.7m from Dh136.8m the previous year.

The company's revenue from chilled water rose by a quarter to Dh943.8m during the year.

Capacity rose 8 per cent compared with the previous year, with 16 per cent more connections added. It built 11 plants during the year, eight for the Dubai Metro Green Line.

Tabreed relies on demand for cooling buildings and other infrastructure projects for the water it chills at its plants. Its main clients are the military, plus property and industrial developers.

But new construction will slow this year, says the firm. Instead, Tabreed will focus on earning revenues from existing capacity. As much as 95 per cent of the firm's plants are locked into long-term contracts.

"We won't be finishing as many plants but we have been in the midst of an extraordinary building plan and as these are complete we will be reaping rewards," Mr Parhar said. The firm has funding in place up until the end of this year and plans to be self-funded from then on, he said.

In April, Tabreed refinanced Dh2.63 billion in debt as part of a restructuring. Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, invested Dh3.1bn and increased its stake in the company.

Mubadala now controls 27.3 per cent of Tabreed. The share includes a 14.8 per cent stake held directly by Mubadala and a further 11.29 per cent held through General Investments, a subsidiary.

Tabreed's shares ended 0.55 per cent lower at 54 fils yesterday on the Dubai Financial Market.

tarnold@thenational.ae

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