Saudi Electricity achieves a net profit of SAR 4 billion in Q2

The Saudi Electricity Company (SEC) published its financial results for the second quarter and the first half of the fiscal year 2023. The company recorded operating revenues during Q2, amounting to SAR 19.7 billion, marking an increase of 1.6% from SAR 19.4 billion in the same quarter in the previous year. The gross profit for the second quarter reached SAR 6.1 billion, a decrease of 7.5% compared to SAR 6.5 billion in the same quarter of the previous year. The operating profit for the quarter was SAR 5.83 billion, slightly down by 0.5% compared to SAR 5.86 billion in the same quarter of the previous year. The net profit for Q2 2023 amounted to SAR 4 billion, compared to SAR 5.5 billion for the same quarter of the previous year, representing a decrease of 27%.

During the first half of 2023, the company’s revenues amounted to SAR 33.1 billion, compared to SAR 32.0 billion for the same period of the previous year, representing a 0.5% increase. The gross profit for H1 2023 was SAR 7.8 billion, down by 15% from SAR 9.2 billion in the same period of the previous year. The operating profit for the first half amounted to SAR 7.6 billion, a 6% decrease from SAR 8.1 billion in the same comparable period of the previous year. The net profit for H1 2023 reached SAR 4.5 billion, compared to SAR 7 billion for the same period of the previous year, marking a 36% decrease. The basic and diluted earnings per share for the second quarter were SAR 0.51, compared to SAR 0.86 for the same quarter of the last year.

Saudi Electricity attributes the decrease in net profit for Q2 and H1 2023, compared to the same periods of the previous year, mainly to increased financing costs as well as higher operations, and maintenance costs due to business growth and intensified maintenance programs in preparation for the summer season, as well as the commencement of new projects in comparison to the previous year. Additionally, there were no profits from discontinued operations in comparison to the same periods of the previous year after the carve-out of the Saudi Power Procurement Company at the end of the second quarter of 2022. The company indicated that the aforementioned factors were partially compensated by increased operational revenues, other revenues, a decrease in provision for bad debts, and general and administrative expenses.

In April of 2023, SEC successfully issued a US$2 billion dual-tranche Sukuk, consisting of US$ 1.2 billion, 10 year, Green Sukuk tranche and a US$ 800 million, 30 year, conventional tranche, under its international Sukuk program. The issuance supports SEC’s ambitions to fund capital projects via innovative and sustainable financing solutions. It has seen strong and resilient order book that peaked at over USD15bn or over 7x oversubscription.

Commenting on the financial and operational results, Eng. Khaled Al-Gnoon, CEO of Saudi Electricity Company, stated, “We are making notable progress in executing programs, initiatives, and strategic investments aimed at securing  and bolstering supply reliability, elevating safety and operational excellence, delivering outstanding customer experiences, and pioneering innovative and sustainable solutions.”

During H1 2023, SEC reached noteworthy achievements, automation in distribution networks surged to 19%, enhancing operational efficiency. The thermal efficiency of energy production in the grid rose to 40.1%, while operational indicators for supply security and reliability hit a record high. Importantly, SEC ensured pilgrim comfort in Makkah Al-Mukarramah, the holy sites, and Al-Madinah Al-Munawwarah by recording historical electrical loads while adhering to the most stringent international safety and security standards.

Eng. Al-Gnoon underscored the escalating need for electrical services, propelled by the economic prosperity in the Kingdom, aligned with Vision 2030. He emphasized SEC’s effective investment of over SAR 15.4 billion during the first half of 2023 to modernize, digitize, and automate the power grid, guaranteeing its capacity to cater to increasing demand for electricity services and network expansion.

Despite the impact from increased financing costs due to a rise in interest rates, the financial performance gained strength through ongoing growth in operating revenues, revenue from transmission, fiber optic revenues from Dawiyat Company, diminished provisions, and an expanding subscriber base, surpassing 11 million subscribers by the close of H1 2023.

Eng. Al-Gnoon expressed deep gratitude for the unwavering support from the government of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz, and His Highness, the Crown Prince, Prince Muhammad bin Salman. He also acknowledged the continuous endeavors of His Highness the Minister of Energy, Prince Abdulaziz bin Salman, in furnishing essential resources to overcome obstacles and challenges, empowering SEC to elevate the standard of service extended to its subscribers.