Thank you for joining us today for the Saudi Energy first half 2026 earnings call. My name is Sammy, and I will be your coordinator for today's call. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue. We ask that in the interest of time, you limit yourself to one question and one follow-up question per person. I would now like to hand over to your host, Rahaf AlFarhoud, Financial Analyst from Saudi Energy, to begin. Please go ahead.
Thank you, Sammy. Good afternoon and good morning, everyone. I would like to welcome you to Saudi Energy first half of 2026 earnings conference call. My name is Rahaf AlFarhoud from Saudi Energy Investor Relation team. I have with me on the call today, Engineer Khalid AlGhamdi, our President and CEO. Mr. Abdulaziz AlMuhaiza, Executive Vice President and the Group CFO. And Mr. Agyab AlFaizy, our Executive Director of Control and Reporting. Before we start the call, I need to direct your attention to our disclaimer in slide number two of the presentation. As usual, a Q&A session with the management will follow the presentation, so please join the conference call to ask questions. I will now give the floor to our CEO, Engineer Khalid AlGhamdi, who will provide a key highlight on period before handing over our CFO to take you through the operational and financial performance.
Engineer Khalid, over to you.
Thank you. Ladies and gentlemen, good day, and thank you for joining us for Saudi Energy financial results for the first half of 2026. During the period, we continue to deliver against our strategic mandate as the backbone of the Kingdom's electricity needs and as a key enabler for Saudi Vision 2030. The economic transformation across Saudi Arabia is increasing the scale, complexity, and strategic importance of the national power system. Industrial development, population growth, digital infrastructure expansion, new economic clusters, and energy transition are all placing greater demands on the grid. Saudi Energy is responding by expanding and modernizing the power system at an unprecedented scale while maintaining the reliability, resilience, and financial discipline expected of a leading national utility. Our first half performance can be viewed through four important themes. First, strategic progress.
We continue to strengthen the national electricity system, expand critical infrastructure, and support the Kingdom's broader economic transformation. Second, sustainable and high-quality growth. Our regulated business model and the regulated asset base require the revenue framework, provide enhanced earnings visibility, and enable us to pursue disciplined investments to drive growth. Third, execution excellence at scale. We continue to advance major generation grid, renewable integration, and battery storage projects while improving operating reliability. As a proof point, this has led us to have a record Hajj without issues. Finally, financial discipline. Our strong investment-grade credit profile, diversified funding access, and sustainable capital structure provide the capacity required to support our long-term investment program. Together, these attributes reinforce Saudi Energy position as a high-quality and dependable regulated national utility champion that is a central participant in the Kingdom's energy transition.
Let us take a look at how our accelerating growth in our customer base, regulatory asset base, and investment underpin our strong earnings. We continue to see sustained growth across the Kingdom. Our customer base continues to grow. Today, we have more than 11.6 million customers, which is an increase of about 215,000 customers compared to the first half last year in 2025. This growth is supported by the Kingdom's population growth, urban expansion, and continued development of new communities. Alongside this continued customer growth, our transmission and distribution regulated asset base reached approximately SAR 278.7 billion, the highest on record and representing a strong year-on-year growth of 14.1%. This continued double-digit regulated asset expansion reflects the scale and pace of our infrastructure capital investment program over the past years and provides a clear foundation for future earnings growth.
We also maintained high investment levels and adjusted capital expenditures excluding customer-funded assets and accruals reached SAR 38.7 billion in the first half, increasing by 6% year- on- year. These investments continue to support our future growth trajectory. These investments and asset growth are translating into strong financial performance during the first half of 2026. Operating revenue increased by 10.5% to SAR 52.2 billion. EBITDA increased by 8.2% to SAR 21.5 billion. Net profit increased by 7.5% to SAR 6.7 billion, and EPS grew even faster by 17.8% to SAR 0.53 per share. Finally, we distributed a cash dividend of SAR 0.7 per share for the full year of 2025, reflecting our continued commitment to shareholder returns while continuing to invest for long-term growth.
Turning to operational excellence, our performance during the first half of this year demonstrates that we are expanding the energy system while continuing to improve security of supply, service reliability, and customer service, and advancing sustainability practices and performance. Generation plant availability improved by 1 percentage point to 87.1%, supported by effective maintenance planning, asset life extension programs, and enhanced operational fitness. Importantly, during the summer period, plant availability further improved to 96.8%, demonstrating the resilience and readiness of our generation fleet during the Kingdom's peak demand season. On the distribution network, SAIDI improved by 28% year on year, reducing the average duration of service interruption for our customers. Distribution automation is a key initiative for Saudi Energy. We increased the automation of distribution network to 42% from 38.4% last year. This has resulted in improved fault detection and enables stronger remote control and restoration capabilities.
As a result, we have already exceeded our 40% automation target. We consider the current level of approximately 42% to be optimal for the network, and we expect to maintain automation around this level as the grid continues to expand. These improvements are translating into better customer outcomes, and customer satisfaction increased to 88% compared with 86% last year. We also continue to strengthen our overall sustainability practices, disclosures, and performance. This has been well demonstrated by improved dependent evaluation for our ESG performance, with our S&P ESG score improving to 65, representing 30% increase year-on-year. Overall, these indicators are a strong demonstration that our strategic focus is producing measurable improvements in system reliability and service quality. We have invested confidently in our business and its assets, and today we are seeing the results.
Before I pass it over to our CFO, I want to acknowledge an achievement that all of us at Saudi Energy are incredibly proud of. Supporting the Hajj season is not simply an operational responsibility for Saudi Energy. It is a national duty, and one that we do not take lightly. Millions of pilgrims depend on reliable electricity system throughout their journey, particularly across the Holy Sites, where demand can reach exceptional levels, concentrated period. During Hajj this year, peak electricity load reached a record of 464 MW in Arafat and 375 MW in Mina. Despite this record load, Saudi Energy delivered the season with zero outages and zero incidents. This outcome was not achieved by chance. It reflects years of planning and sustained investment in the energy infrastructure across the Holy Sites. We have continued to strengthen this infrastructure through ongoing investments and operational readiness across the business.
Today, the Holy Sites are supported by more than 6,000 circuit km of distribution lines, over 3,000 substations, and more than 10,500 smart meters, all supported by 100% network automation. Over the past year, we have made significant enhancements to the assets powering the Holy Sites. We added Mina 7 station. That has added another 134 MVA capacity, and in total, we added 123 distribution substations. We also enhanced the transmission and distribution network with 191 circuit km of cables. Further, we advanced the fiber optic network, and as a result, we have fully automated distribution network at the Holy Sites. In total, we carefully maintained over 25,000 units equipment at the Holy Sites to enable the success of Hajj. Behind these assets were our teams working around the clock, supported by advanced monitoring systems to ensure uninterrupted service for each and every pilgrim.
This included extensive maintenance activities across our generation, transmission, and distribution assets. Thank you so much. I will turn it over to our CFO, Mr. Abdulaziz AlMuhaiza.
Thank you, Engineer Khalid, and thank you all for participating with us today and shedding some light on the company's financial and operations performance for the period. Saudi Energy continues its growth across the integrated value chain of generation, transmission, and distribution. In generation, we operate and own 38 power plants, generating 56.9 GW of capacity. The availability has improved compared to the same period of last year, reaching 87.1%. Also, somewhat availability also has increased by 1.4%, reaching 96.8% compared to last year. The total generated energy from these plants has reached 109.2 TWh for the period. When we shed some light on the transmission businesses, the transmission assets and transmission network line has increased by 4.2%, reaching 108,100 circuit km, with the transformers capacity of 560,000 MVA, with an increase of 9.2%.
When it comes to the renewable grid integrated, it has increased by 86.4%, a substantial increase from 9.5- 17.8 GW of capacity. The energized battery storage also has reached 18 GWh , which is 125% compared to the same period of last year. When we move and look into the distribution and retail businesses, the distribution network line reached 868,900 circuit km. That is a 5% increase to the network. The customers we are serving today, 11.6 million customers, with almost a 2% increase in the numbers of customers, and new customers are joining us. This has resulted in an energy sold of 160.7 TW of sold energy, with almost a stagnant growth compared to the same period of last year.
Moving on to the next slide, to slide number 11, we will dig deep down on each of these businesses, starting with generation and the potential growth and the strategy of the company in each of these businesses. The company is capturing the growth of generation with 23.4 GW of capacity, 11 gas thermal generation projects under development. The company, in the past 12 months, signed two PPAs. One is Rabigh 1 expansion with the 25 years with SPPC, the Saudi Power Procurement Company. The other project is Rabigh 2 expansion, which is Al-Mourjan IPP, with 31 years PPA purchase power agreement take-or-pay. On the other hand, the company also continues its commitment to the energy transition and the liquid to gas commitment by 2030, with eight projects under energy transition to gas from liquid, 22.3 GW of capacity.
The company has completed phase one of PP10 of 1.7 GW, and the Rabigh 2 is also almost commissioned. Under renewable trends, the company has partnered with EDF in Shams project with 600 MW under development. Also, the company is participating in round seven tender that is being tendered by the SPPC of 5.3 GW. When it comes to security of supply and reliability, 2.4 GW of assets extension have been extended, and 10 units have been restored with 256 MW of capacity. Moving on to the next slides and looking into the transmission and distribution and the backbone of the power system here in the kingdom. Transmission network has increased by 3,500 circuit km added during this period. We have energized 49 substations. The battery storage for the first six months has been increased to 10 GWh , with 4 GWh being under construction.
1.5 GW of interconnection with Egypt has already been energized. The same story of growth goes to the distribution business with an increase of transmission of distribution network of 9,800 circuit km, with 3,300 transformers energized during the period. We have added 151,000 customers, reaching, again, as I said, to 11.6 customers in total, with 42% automation. All of these growth are coming with, and as part of the company's growth and target for 2030, which can be seen at the bottom of the slides, where we are targeting to reach 146,000 transmission line circuit kilometer by 2030, and 1,500 transmission substation. Distribution line, it is expected to reach by 2030, 1,100 circuit km, with the distribution transformers as well, reaching to 172,000 distribution transformers by 2030.
Moving on to the next slide, where we are shedding more lights on the renewables and the energy transition when it comes to the company's commitment to support the renewable energy and the penetration of the renewable energy in the system, as well as the battery storage. The national target for the renewable energy is 81.7 GW, 86% of this already being tendered or energized. 17.8 GW has been added since the beginning of the year. 46.7 GW is being under construction, and 13.1 GW is in the pipeline. The same thing, the same story goes to the battery storage. The target nationally is 42. 18 GW fully owned and operated by the company is energized, four is being under construction, and 22 GWh is the targeted capacity by end of 2026.
When it comes to the other businesses as part of the group, which we call them beyond the value chain of power. The subsidiaries continue to grow in the respected businesses. Starting with the telecom business, 4 million IoT SIM card activated by the telecom company. Today, they have reached to 34 city, energizing more than 927 FTTX and homes across the Kingdom. The same growth goes to the second subsidiary, which is the project development company. Today, they are managing 1,300 projects, including 119 giga-projects and national giga-projects. Reaching the total projects under management today to SAR 54 billion. The ICC, which is the company that is basically responsible for constructing and developing all the generation capacity, the new generation capacity. Today, they are managing the construction of 23.4 GW, and as I mentioned, they've already signed multiple PPAs with the Saudi Power Procurement Company.
Saudi Energy Solutions, the same growth, where they are supporting the ecosystem of the energy in general with winning 54 projects in Q1, and also supporting the customers with a combined capacity of 1.5 GW. The real estate, the Ittijahato Al Usool. The real estate company has already been activated and started to do its operations when it comes to executing the company's strategy of the real estate by monetizing the real estate assets that we have commercially, and utilizing them to deploy all of these proceeds in the core business of the company, starting early this year. Moving on to slide number 15, where we will be shedding some light on the fact, figures, and numbers of the company for the first half. The revenue has increased by 10.5%, reaching to SAR 52.2 billion, and the Q2 has increased by 11.3% year-on-year.
The same goes to the gross profit. It has increased by 8.5% compared to the same period of last year. The operating profit for the period, 7.6% increase year-on-year as well. The bottom line has increased by 7.5% year-on-year, and the Q1 was negative by 7.4%, primarily due to the increase of debt that the company raised during this period to finance its growth and capital projects. The earning per shares has increased by 17.8% year-on-year compared to the same period last year. The primary KPI, which is the EBITDA, which shows the growth in the business and the profitability of the business generated by the company, has increased by 8.2% for the period and 3% for Q2 respectively.
When it comes to the details of these elements, a substantial increase in the revenues, 10.5%, adding SAR 5 billion to the top line of the company, primarily driven by the increase in electricity sales by SAR 1 billion, and also increase of transmission use of system by 26.2%, reaching SAR 209 million, and also the balancing account and the other operating revenue by SAR 3.5 billion. This has resulted us reporting SAR 52.2 billion in the top line. When we look at the segments, the drivers of the revenues driven almost across the segments, except for industrial, with different percentage of growth compared to the same period of last year. This has also contributed from quantity base to the revenue and electricity sales at the bottom of the slides. When we look at the primary drivers for the increase of our bottom line from SAR 6.2 billion- SAR 6.7 billion.
The top line, as I mentioned in the previous slide, that has been an increase on the operating revenue by SAR 1.6 billion. The balancing account increased by SAR 3.3 billion. There has been some increases in cost of fuel and purchased power and other operating costs and depreciation in line with the growth of the business, and an increase in sales, as well as the finance cost of SAR 211 million, which again, is resulted of that increase of almost SAR 500 million on the net income. The company, as you expected from the story, continue to invest heavily in its CapEx and execute its strategy. The CapEx invested in the period has reached to SAR 38.7 billion, primarily on the transmission business, which include also the battery storage, along coming in second the distribution and then generation.
This goes in line with the company's strategy that has been already communicated, which shows also that we are executing based on that plan. Again, this is slightly higher than what we have invested with the same period of last year. However, we are expecting that the total invested CapEx by end of the year reach to SAR 70 billion-SAR 75 billion. When it comes to the strategic, or the primary drivers of the growth of the business of the company, which is primarily the transmission and distribution and the growth in the RAB, you will see that the capitalized investments, and the company has managed to capitalize SAR 28.8 billion worth of work in progress projects, and energize them.
This has increased the RAB from the same period compared to the same period of last year, 12 months by 14.1% from SAR 238 billion worth of RAB, compared to SAR 272 billion. This is a substantial growth, representing the efficiency in the company's turning projects into energized assets that generate returns and revenue to the company. We are expecting this also to continue year on year, as we have shown from 2022 up to until 2025. Again, with the same rhythm, with the same percentage reaching to almost double-digit growth in the RAB year- on- year.
When it comes to the way the company fund its investments and growth, the company has a clear strategy of diversifying the source of funding, coming from different pools of liquidity that is locally and regionally and internationally with a different type of instrument that we tap into to fund those investments. Also we are looking at our balance maturity profile carefully and prefund them and refinance them as required as we go. Monitoring the market, monitoring the opportunities ahead of us in capturing the opportunity that can be used to refinance or to fund the growth that is required from a project's perspective.
The company, in that regard, had tapped into the market multiple times since the beginning of the year with a public issuance, with a SAR 16 billion Murabaha facility that we signed with the local banks, and refinancing also for SAR 16 billion early in the year with multiple also bilateral agreements that we signed with international banks, export credit agencies, and also local banks. When we move to the balance sheet, the company look at its balance sheet positively, maintaining a balanced debt and equity. Compared to other peers in the business, we maintain a very healthy balance, with especially the robust regulatory regime that we're operating in, and maintaining healthy ratios on that regard. Finally, a couple of messages that I just want to leave you with.
The results that we've reported in Q2 and for the period is a continuation of the company's successful strategic delivery of projects and CapEx investments and growth. The growth has also coupled with the growth in our performance and returns to our investors and operations, and reporting growth in our EBITDA. We are focusing on advancing our operational excellence and capturing efficiencies across the value chain, and be as efficient as possible by improving our KPIs, our availability in generation, supporting the resilience of the system, and the security of supply to our customers. We continue with our strategic growth, and when it comes to the strategic investments that we've done for the period, and continue our commitment of targeting double-digit growth in our RAB year- on- year, which is again, resulting in a positive results in growth in our results.
All of this is coming with the company's maintaining its diversified pool of funding and maintaining its creditworthiness and credit rating, robust levels. Also, at the end, we are positioning ourselves to support the Kingdom's economy and the Kingdom's power sector, to achieve the Vision 2030 target, Inshallah. Thank you.
Thank you very much. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Please remember that in the interest of time, we ask you to limit yourself to one question and one follow-up question per person. Our first question comes from Kaushik Gopalakrishnan from HSBC. Your line is open. Please go ahead.
Thank you. Thank you. Am I audible? Am I audible?
We can hear you.
Please go ahead.
Thank you for the presentation. This question is coming on behalf of Ildar Khaziev , HSBC. When do you expect the new regulatory WACC rate for the 2027, 2029 period to be finalized and released?
Well, as you may know, as we've communicated, the regulatory regime gets reset every three years. The first regulatory period started in 2021 and ended 2023. The second regulatory period started in 2024, and in this year, we are expecting that the WACC will be released before the end of the year. But again, this is a regulatory decision, and the regulator, the way they see it, whenever they are suitable for them to announce it, they will announce it. However, generally, we're expecting this to come before the year end.
Thank you. I'll go back in queue.
Thank you very much. As a reminder, if you wish to ask a question, please press star followed by one on your telephone keypad now. Our next is a follow-up, one from Kaushik again. Please go ahead.
Thank you. Could you please share RAB asset basis for distribution and transmission segments separately? And any chance you could share also the depreciation charges in the transmission and distribution segments over the first half of 2026?
Well, thank you for the question. I think we are giving in the financials a fair segregation of the business on a standalone basis for generation, transmission, and distribution. If you look at the notes, you will see that segregation there with the cost of generation, transmission, and distribution, from a depreciation perspective, which you've asked for.
If I am to understand correctly, the regulator does not use a different cost methodology while calculating the required revenue. Is it, or it's the same as what you have reported?
Can you please repeat your question again?
So it is our understanding that under the RAB model, the regulator operates with a different P&L when setting the required revenue, where costs are different from those reported in IFRS. Any disclosure helping us understand the key differences will be appreciated.
Yeah, I think, again, the regulatory accounting doesn't differentiate the cost. There is definitely the difference between, from a reporting perspective, between the IFRS standards and the regulatory accounting aspects. However, what's being reported is almost fairly in line with what's being reported to the regulator. There might be some detailed segregation between transmission and distribution that gets reported to the regulator. But going back to the same question you've asked earlier on the depreciation, there is no change. There is a technical lifetime that is in line with the IFRS standards that we have accounted for. There's no big significant change there.
All right. Thank you so much. Just the last one, if I may. Any thoughts on 2027 you can provide?
Sorry, 2027 what?
The CapEx. Any guidance you can.
Sure. I think generally, the company's strategy that we've had always been communicating, that the company is executing a very important investment plan to the kingdom and to the sector. We have seen a significant increase on the CapEx of last year and also in 2024. We're expecting this year and last year is going to be with the same level and start declining towards 2028, 2029 and 2030, as we are uploading our investments ahead of the major events and giga-projects that are going to be energized by then.
Thank you very much. Our next question comes from Muhammad Faisal with Riyad Capital. Your line is open. Please go ahead.
Hello. Thank you for the presentation. I just had a quick question. Given the continued CapEx needs over the next few years, and given that the financing costs have also been increasing, are you guys looking at any other sources of financing to finance the continued CapEx needs over the next few years?
Sure. A couple of things just to clarify on this point. Definitely, this is a very important question. I think the funding plan for the company has been a very important and key to the success of our investments plan. When we look at the company's businesses, the transmission and distribution is a core business which will be financed through multiple funding pools, which I'll come to it in details. However, in generation will continue to be on a project finance basis as it is packed by a PPA and a purchase power agreement signed with the SPPC, which is owned by the government, and I think this will continue with that model. When it comes to transmission and distribution, every year, every period, we assess the market, we assess the options. Definitely, we are looking into not only at just a debt option.
We started monetizing some of our assets, and if you look into the presentation that we've presented, we started with our real estates as one asset monetization exercise that we do for what we call it in the company, non-revenue-generating assets, which is the real estate, and we will continue with this as a source of funding to the core business. However, to answer your question, given the stable balance sheet that we have and room of accessing cheap capital through the debt capital market, the debt and generally is going to be the primary funding for the growth. The concerns that you've mentioned on the increase of cost of debt, this is going to be compensated for the company through the regulated weighted average cost of capital, which is getting reset every three years.
We're not concerned about being compensated for that increase on the volatility in the market as the regulator is looking into this as well. However, just in a very simple term, we are trying and working to diversify the funding for our core business in the future, bearing in mind the market condition, the diversification of pool of funding for the growth.
All right. Thank you very much. Just if I can you give some more details about how you are planning to monetize the real estate assets that you have? Is there anything in place, which you may want to share, or is it still in very early stages?
We have already started. I think if you are interested more on this topic, I think it would be more insightful to reach to the subsidiary itself and see the monetization strategy that they have in details. Some of their monetization structures mature or some of them is at early stage, which I think the investor relations team can connect you with them directly.
Sure. Thank you very much.
Thank you.
Our next question comes from Nafez Al Abbas from Ajeej Capital. Your line is open. Please go ahead.
Thank you. Thank you for the opportunity to ask a question. My question is on the suppliers. Do you think, or did you face any indication from them of delays or having them cost, or suffering from cost escalations due to the conflict? Thank you.
Well, definitely we are looking into the geopolitical situation very carefully, and we are monitoring the sustainability of supply chain and security of supplying the needs of our projects. However, given the government's direction and the close coordination between the company and Ministry of Energy, we haven't seen a significant delay or change that might impact the execution of project. There might be some delays in some of the projects due to some delays in arrival of some of these spare parts or material for the project, but this is not going to be a significant that is going to impact the execution of projects. Not to mention that a big portion of our supply is localized and coming from the local market.
Great. Thank you very much.
We currently have no further questions. With that, I'd like to hand back to Rahaf AlFarhoud for some closing remarks.
We would like to thank you for your continued engagement and for joining us for today. Today's presentation and all supporting material will be available on our website as well as our investor relation application, for which you can see the QR codes on the screen. Once again, thank you very much and we look forward to engaging you again in our next call. Thank you.