Riyadh, Saudi Arabia – Saudi Electricity Company (SEC) has reported operating revenues of SAR 23.8 billion ($6.34 billion) in the third quarter, representing a 4.6% increase compared to the same quarter in the previous year.
SEC attributed the revenue growth primarily to a surge in demand for electrical energy during the summer season, which saw a remarkable 10% rise. The company also noted ongoing growth in its subscriber base. The increase in revenue from the transmission system was fueled by higher subscriber usage and was further boosted by the growth of Dawiyat Integrated Telecommunications and Information Technology Company, a subsidiary of SEC. This subsidiary’s success was linked to the growing utilization of FTTH (Fiber to the Home) fiber optic connections.
Despite a 5.3% year-on-year increase in operating costs, driven by business expansion and increased demand, SEC’s robust revenue growth outpaced these cost increases. The growth resulted in a 3.3% increase in gross profit for the quarter, reaching SAR 7.7 billion ($2.05 billion), up from SAR 7.5 billion in the same quarter of the previous year.
Operating profit for the third quarter remained stable compared to the same period of the previous year at SAR 7.2 billion ($1.92 billion). However, net profit for the third quarter amounted to SAR 5.8 billion ($1.55 billion), reflecting an 8.3% decrease. This decline was attributed to increased finance costs, stemming from global interest rate hikes and additional funding for capital projects. The company’s quarterly booking of Zakat provisions contributed to the decline in net profit. Basic and diluted earnings per share for the third quarter of 2023 were SAR 0.94 ($0.25), down from SAR 1.07 for the same period in the previous year.
For the first nine months of 2023, SEC reported operating revenues of SAR 56.9 billion ($15.19 billion), marking a 2.2% increase compared to SAR 55.7 billion for the same period in the previous year. Gross profit for this period reached SAR 15.6 billion ($4.16 billion), down from SAR 16.7 billion in the same period last year, representing a 6.7% decrease. Operating profit for the first nine months was SAR 14.7 billion ($3.92 billion), down 3.4% year-on-year from SAR 15.3 billion. Net profit for the nine months amounted to SAR 10.3 billion ($2.75 billion), down 22.8% year-on-year from SAR 13.4 billion. At the end of the third quarter of 2023, the company’s total equity amounted to SAR 260.9 billion ($69.66 billion), with an annual growth rate of 0.7%.
SEC explained the year-on-year decline in net profit for the nine-month period ending on September 30, 2023, as a result of higher operations and maintenance costs due to increased demand for electrical energy, business expansion, asset growth, enhanced maintenance programs, and new projects. Rising finance costs also contributed to the decline. However, these cost increases were partially offset by increased operating revenues due to higher demand for electrical energy, ongoing subscriber base growth, and increased transmission system revenues from higher subscriber loads.
“The company successfully met the unprecedented and substantial growth in electricity demand during this year’s summer season, surpassing a 10% growth rate, where the growth in peak load of the electrical grid reached 8%, surpassing a record-breaking 70.6 gigawatts,” the CEO of Saudi Electricity Company Eng. Khaled bin Hamad Al-Gnoon. “This sustained upsurge in demand mirrors the burgeoning economic vitality within the Kingdom, a testament to the successful implementation of its Vision 2030 programs.”
Al-Gnoon also revealed SEC’s ambitious investment strategy, aiming to inject a total investment of SAR 500 billion by 2030. This strategy seeks to provide exceptional electrical services to subscribers and play a pivotal role in realizing the objectives outlined for the electricity sector under Vision 2030. He highlighted the company’s expansion plans, including investments in the Electric Vehicle Infrastructure Company and the acquisition of power plant projects, showcasing the company’s leading position in the electricity generation sector in the Kingdom.
The achievements and continuous improvement in service quality, as noted by Al-Gnoon, were made possible with significant support from the government of Saudi Arabia. The Minister of Energy, Prince Abdulaziz bin Salman, provided guidance and continuous oversight to overcome obstacles and challenges facing the electricity sector’s development and improvement of services to subscribers.
In the financial markets, SEC successfully issued dual-tranche Sukuk worth $2 billion in April last year, comprising a $1.2 billion green Sukuk tranche with a ten-year maturity and an $800 million conventional Sukuk tranche with a thirty-year maturity, as part of its international Sukuk program. Additionally, last October, the company entered into an international syndicated facility agreement worth $3 billion (equivalent to SAR 11.25 billion) with four leading banks in the region, supporting its investment plans and enhancing its asset base for improved financial position and revenue growth prospects.