Hello, and Welcome to the Qatar Electricity and Water Company 2024 conference call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q&A session. If you would like to ask a question by that time, please press star one on your telephone keypad. Thank you. I would like to turn the call over to Bobby. You may begin.
Yeah. Hi. Thank you, Angela. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Qatar Electricity and Water Company's third quarter and nine months 2024 results conference call. On this call, we have Shahzad Iqbal Gill, who is the Chief Finance and Planning Officer at QEWC, and Dan Sabitov, who is the Corporate Planning Performance and IR Manager. We will conduct this conference with management first reviewing the company's results, followed by Q&A. I would now like to turn the call over to Shahzad. Shahzad, please go ahead.
Thank you very much, Bobby. Good afternoon, everyone. Thank you for joining QEWC's Q3 and nine months results call. I will start with a snapshot of our results that we posted in Q3. I will go through that quickly, then we will get into the details of the year-to-date and quarter results with Daniyar, and then we will open the call for the questions. Earlier today, we had posted the materials on our website and on QNB's website.
I will go through slide number four first, where we have revenues for Q3 for the group. We posted the revenues at QAR 834 million rials for Q3, compared to QAR 798 million in the same period last year. The net profit for quarter three 2024 is QAR 509 million rials, compared to QAR 340 million for the same period last year. If we look at year-to-date results, revenue for the nine months is 2.265 billion.
Compared to last year, in last year it was QAR 2.178 billion. Net profit for year-to-date 2024 is QAR 1.189 billion, compared to QAR 1.109 billion. I will get to the next slide, where we will analyze how these stack up with last year's performance. You would see year-to-date nine months revenue, QAR 2.265 billion, is 4% higher than last year, same period. EBITDA is reported at QAR 1.017 billion, which is 5% higher than last year.
If we look at net income, we are QAR 1.189 billion, we have posted for nine months, which is 7% higher than last year. There is a snapshot of the capacity figures here. I will just run through that. For the power capacity operational, gross is 20.1 GW. If we look at net, which is ownership adjusted, this is at 8.5 GW at the end of September. For water capacity, gross 541 MIGD, net 392 MIGD.
Renewables, gross 4.3 GW and net 1.1. We have capacity under construction, gross 3.2 GW, and net ownership adjusted 1.1 GW. Moving on to the next slide. I will move to slide number seven, where we have comparisons of dispatched water and power. Sent out water is 5.3% higher, and sent out water was 1% higher in the nine months, up to September.
You would see slight decrease in the power availability, but that is due to the planned outages in the year. Water availability is at the same level as last year. Moving on to the next slide number 8. Here we have a high-level comparison of revenue, EBITDA, and net profit. Revenue of QAR 2.265 billion versus last year, QAR 2.178 billion. This is due to the sent out water and power. We will get into the details of the numbers later on. EBITDA, QAR 1.017 billion versus QAR 972 billion.
Sorry, QAR 0.972 billion last year. Net profit, QAR 1.189 billion versus QAR 1.109 billion. Earnings per share posted at the end of September, QAR 1.08 versus QAR 1.01 last year for the same period. Here, I will hand the call over to Dan, who will take you through the details of the numbers.
Thank you, Shahzad, and good afternoon, everyone. Today, I will first cover year-to-date performance in more details, followed by short quarter results. Turning to slide nine, gross profit increased from QAR 663 million last year to QAR 715 million this year for the same reasons explained by Shahzad, partially offset by high operating costs, mostly gas consumption. EBITDA increased by 5% and reached QAR 1 billion and QAR 17 million this year.
Main drivers for the increase were higher gross profit and interim dividends in the third quarter of 2024 from available-for-sale investments. As you can see on slide 10, share profit from our joint ventures and associates increased by QAR 78 million in comparison to last year's results, which is primarily driven by a higher gross profit and lower finance cost of Ras Girtas Power, a joint venture in Qatar. Start of commercial operations of Sun Power Plant this year.
Additional share in two gas power plants in Jordan and the results of U.K. wind portfolio that we acquired in December 2023. Interest and other income decreased from QAR 438 million to QAR 390 million this year. Decrease is explained by lower interest income on deposits from lower cash available. As you may remember, QEWC repaid all short-term loans in 2023. As for other income, one-off items and other drivers largely offset each other. Net profit was QAR 1 billion 189 million, which was QAR 80 million higher compared to the same period of last year. In addition to the drivers previously explained, net profit benefited from lower finance costs, partially offset by gain on sale of Siraj Energy in 2023 and higher income tax expense this year. A snapshot of third quarter results in comparison to the same period of last year is presented on slide 11.
I will give more detailed overview in the next two slides. Now turning to slide 12. Both revenue and gross profit increased by 5% and 11% respectively versus last year. This was driven by higher sent-out power and higher tariffs as per contracts. Higher EBITDA for the third quarter for this year is due to similar drivers, as well as interim dividends from available-for-sale investments received this year. Now turning to slide 13. Higher share of profit from JVs and associates, mainly driven by better performance of assets in Qatar, reversal of effect sources in Sun Power Plant, higher generation and sales of green certificates in Murra Warra Wind Farm and other drivers. Lower interest and other income is largely due to lower interest on deposits. Developments we received in Q3 last year, partially offset by interim dividends from available-for-sale investments in Q3 this year.
Higher net profit driven by the items previously explained and lower finance costs, partially offset by higher income tax expense this year. Now moving to financial position on slide 14. The total assets of the company stand at QAR 23 billion, with almost no change from last year. 17% decrease in cash is mainly due to payment of dividends for 2023 and interim dividends for 2024 by QEWC.
Increase in value of available-for-sale investments driven by the change in market price of shares. Turning to slide 15. Total equity of the company remained almost the same at QAR 15 billion. QAR 1.2 billion net profit was offset by dividends declared and paid this year. Net debt position increased from QAR 3 billion to nearly QAR 3.7 billion, driven by the change in cash explained previously, while total debt remained at QAR 6.8 billion. With that, we will open up questions. Over to you, Bobby.
Okay. Thank you, Dan. Angela, can we open up the call to questions, please? Thank you.
All right. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue, and press again to withdraw your question. Your first question comes from the line of Aashish Agarwal with The First Investor. You may begin.
Hello, gentlemen. Thanks for the opportunity. I have a question related to your finance costs. I believe it is because of the one-off from the FX gains. Can you please confirm the number? Is it QAR 73 million one-off just in the third quarter itself?
Third quarter.
73.
Yep.
Yeah. I can confirm it is QAR 73 million in third quarter only.
Yeah. If I may just ask as a follow-up, what sort of run rate should I expect going into the fourth quarter, both with respect to your finance cost as well as your overall net income for the group?
In terms of finance cost, FX gains and losses, of course, we are not going to comment on that. Otherwise,
Right
the finance cost, taking out the debt last year that we paid, is going to be pretty consistent based on the project that we have. You can estimate from there.
I will just jump in here. The QAR 70 million Shahzad mentioned is for quarter only. QAR 70 million is the overall decrease in finance costs. Inside of this, QAR 48 million is related to variance in FX gain and loss.
Sorry, could you please repeat that?
Yep. Total variance in finance costs for the quarter-over-quarter is QAR 70 million.
Yeah.
Yeah. Out of it, QAR 48 million is driven by FX.
Okay. And QAR 48 million is driven by the FX?
Correct.
Okay. That is QAR 70 + QAR 48, which is QAR 118, you are referring to as the total finance cost for the third quarter of 2024?
No.
Total is QAR 70.
Total variance is QAR 70 million. Out of this, QAR 48 is FX.
Out of that QAR 48 is FX, you are saying?
Yep.
Okay. All right. Could you please comment on Okay, fine. I'm a bit unclear on the guidance for the finance cost. I did see your cash flow statement and the loan repayments you have done. I believe that loan repayment, correct me if I'm wrong, belongs to your outside Qatar subsidiary, which is of Nebras, I believe.
No, that's not correct. The loan repayments were in Qatar at QEWC level, corporate level.
Okay. QEWC level, corporate level. Okay. All right. Can I just ask you plain and simple, what's your weighted average cost of debt after this loan repayment?
Weighted average cost of debt, I would suggest to send a question to Daniyar, Dan, and we will
Okay
let you know. I don't have the number.
All right. Okay. Thanks. I will leave the floor for the other participants, and maybe I will join back with you. Thanks a lot.
Thank you.
Your next question comes from the line of Seki Mutukwa with Ashmore. Please go ahead.
Hi there. Thank you. Hope you can hear me. Two questions please, and apologies if you addressed this already earlier. What were the drivers of the increase in sort of sent out power over the period? Just perhaps to understand if there's sort of growth in demand or there's some other easier explanation. The other bit is just a reminder, please, on the key commissioning dates for this incremental capacity you flagged in the presentation under construction. Thank you.
Yeah. Sent out power is driven by higher demand by the offtaker and better availability at our end also. Getting to the COD dates, we have two under construction projects in Uzbekistan at the moment. The expected COD dates for first one, which is Syrdarya 2, is Q1 2026, and the other one, which is Surkhandarya, is Q3 2027.
I'm sorry. From the scale of those two under construction, which one is the bigger one? Apologies.
They're both the same capacity.
Same size. Okay.
Yeah.
Perfect. Thank you.
Your next question comes from the line of Jonathan Milan with Waha Capital. Please go ahead.
Thank you very much, and congratulations on a very good set of results. My question is with relation to free cash flow. Your free cash flow is quite strong, not only from your existing operations, but also dividends from associates JVs, and dividends from investments. And you have managed to reduce debt, excluding Nebras as well. How does this translate into dividend policy? Are you thinking of changing your dividend policy? How do you think of dividends and capital allocation going forward?
So dividend policy is same for now, and you can expect a similar sort of dividend results. Of course, that depends on board approving those dividends and end of the year results. So still, as you know, three months more to go. In terms of capital allocation, we have growth coming up within Qatar as well as internationally. Our business development teams are looking for projects. We are working on some projects in the pipeline. Too early to disclose. It is too early stages at the moment, but there are growth opportunities internationally that we are working on.
But in Qatar, they come with demand directly attached to it. I mean, it is not even an issue. You can simply borrow to fund that capacity growth, and it will directly come with cash flow. So what I am trying to understand, because your actual free cash flow to equity is well above your dividend payout, but I see more and more investments in JVs and often a reduction in debt. So, I mean, is a 60% payout the maximum we can hope for?
Yeah. At this stage, I would say it would be similar to last year. Again, I want to caveat this needs to be approved by the board and end of the year results. Unfortunately, that is the only thing I can say.
But last year saw a cut. Last year was 86 fils. It was a cut versus 95 fils the year before, even though operationally speaking, you are still quite as strong. Or did you mean as payout?
If we end the year the same as the strong results as we have seen in Q3, we will propose something better. But again, it needs to go through and accepted by the board and agreed by all the parties.
Okay, thank you very much.
Thank you.
Your next question comes from the line of Rabih Moussa with Epicure Investment Management. Your line is now open.
Hi. Hello. Thank you for the opportunity. I have two questions, one related to SGA and the other is related to equity accounting share. I can see SGA is much lower compared to last year. What was the reason for that, and what can we expect going forward? The other question is related to equity accounting share. There has been a significant increase in income from equity accounting versus last year. What was the reason for that, and do you have any guidance for the coming period? Thank you.
On the first question on G&A, decrease is mainly driven by the fact that impairment of financial assets was recorded in 2023 as part of G&A, which is approximately QAR 20 million . As for your second question on the high share profits from equity accounts in UCT, it is a combination of drivers given we have new assets coming online in 2024. As we mentioned, the power plant in Bangladesh, we increased our share in two gas plants in Jordan, as well as our U.K. wind portfolio that we acquired in December 2023, resulted in higher overall earnings this year.
Also-
Can we get-- Yeah.
Results from one of the Qatar within Qatar JVs.
Okay. Can you give us any guidance for that? For the future period, do you expect more projects or similar to this period?
The acquisitions that we have done in the early part of the years under Nebras umbrella are the only ones so far. There could be one more, but again, it is too early to say anything. In terms of overall full-year guidance, I would say first half of the year, taking out the one-off items, can be a good guidance for the run rate of JV earnings.
Okay. Thank you.
Your next question comes from the line of Seki Mutukwa with Ashmore. Your line is now open.
Thanks again. Just a strategic question about Nebras view over the next five years in terms of where you would ideally like to see the share of renewables capacity on the business versus where we are today, please.
What we have planned for the international investment arm, Nebras Power, it is actively seeking to invest in the renewables. As you have seen in the past as well, Nebras has done some investments in Australia, Brazil, and the Netherlands, in the renewables. Going forward, on Nebras Power's business plan, we aim to have 50/50 capacity over the next five years in renewables and thermal. This is Nebras Power I am talking about.
Okay. Thank you.
Your next question comes from the line of Jonathan Milan with Waha Capital. Your line is now open.
Yeah, thank you for allowing me to ask a follow-up question. I see a question on the balance sheet. I see you have about QAR 2.15 billion rials worth of equity investments at fair value. I believe these are equities on the stock exchange. What is the strategy with regards to those, and would you consider drawing down and selling some of those to pay down the debt to release the debt or fund CapEx using those? Given that you are essentially a utility company, why hold QAR 2 billion rials worth of equity investments when you can adjust your capital allocation or pay a higher dividend?
Yeah, a very good question, Jonathan. This is exactly what we are working towards. We are in the midst of reanalyzing everything, from debt at Nebras level versus what we have here and upcoming CapEx requirements, growth CapEx requirements in Qatar and elsewhere. We will come up with a strategy. I can also mention here that most of it will go towards the growth CapEx and partially towards the dividends. As I mentioned earlier, the strategy is being developed currently.
But could you be selling some of those QAR 2.2 billion in equities to help fund the growth CapEx?
Yes.
Okay. Excellent.
Again, if you would like to ask a question, press star one. There are no further questions. I will now like to turn the call back over to Bobby for any remarks.
Thank you, Angela. If there are no further questions, we can end the call for today. I want to thank Shahzad and Dan for taking the time to answer our questions, and we will pick this up again next quarter. Thank you so much.
Thank you very much, Bobby. Thanks, all, for joining.
That concludes today's conference call. Thank you all for joining. You may now disconnect.