Revenue Growth Boosts Profitability of Saudi Public Utility Coys

Public utility companies listed on the Saudi Stock Exchange (Tadawul) achieved a 15.76 per cent growth in their net profits by the end of the first half of 2024, reaching SAR 6.56 billion ($1.75 billion), compared to SAR 5.67 billion ($1.51 billion) during the same period in 2023.

The companies recorded a 14-per cent growth in their revenues during the same half, equivalent to SAR 5.79 billion ($1.54 billion), after achieving sales worth more than SAR 46.76 billion ($12.47 billion) during the first half of 2024, compared to SAR 40.98 billion ($10.93 billion) in the same period last year.

This growth in revenues and net profitability is a result of an increase in sales and revenues, the launch of new projects and rise in the number of subscribers and demand for services.

The sector includes six companies: Saudi Electricity Company, ACWA Power, Alkhorayef Water and Energy Technology, Marafiq, National Gas and Industrialisation Company (GASCO), and Miyahuna.

According to the financial results announced on Tadawul, all companies in the sector achieved growth in profits, except for Marafiq, which recorded a decline in profits by 59.37 per cent to SAR 108.13 million.

In comments to Asharq Al-Awsat, financial advisor at the Arab Trader Mohammad Al-Maymouni said that Alkhorayef Company has driven this boost in profitability by registering the highest growth rates, as a result of recovery in the areas of development, design and production.

ACWA Power had also a strong impact on the growth of the sector’s profits, Al-Maymouni noted, thanks to the increased activity of water and energy supply projects and the cost of maintenance revenues, which contributed to the overall rise in the company’s revenues.

The cost of energy and fuel, as well as financing costs and interest rates, are the greatest burden on the profits of companies in the sector as they contributed significantly to the decline in the profitability of Marafiq by 59 per cent during the second quarter of 2024, he noted.

Al-Maymouni highlighted factors that would support the profitability of the sector, such as continuity of projects acquired by sector companies, infrastructure and wastewater development operations, and lower financing costs and interest rates during the coming quarters.