Saudi Electricity Company (SEC) Net Profits Surge in Q1 2024 to Reach SAR 897 Million

Saudi Electricity Company (SEC) announced today its financial results for the first quarter of 2024, recording a 19% growth in operating revenues, which reached SAR 15.9 billion compared to SAR 13.4 billion for the corresponding quarter of the previous year. The gross profit reached SAR 2.1 billion compared to SAR 1.8 billion for the same quarter of last year, marking a 22% increase. The operating profit was SAR 2.0 billion compared to SAR 1.7 billion for the corresponding quarter last year, an increase of 17%. Net profit amounted to SAR 897 million compared to SAR 480 million for the same quarter last year, up by 87%. Total equity at the end of the first quarter of 2024 was SAR 257.5 billion compared to SAR 256.3 billion at the end of 2023, representing a 0.5% growth over the first three months of 2024. The company’s total assets grew by 3% to SAR 517.2 billion.

SEC attributed the increase of the net profit for the first quarter of 2024, compared to the corresponding quarter of the previous year, primarily to the increase in required revenue recognized during the current quarter. This rise was due to increased regulatory return (WACC) and the growth of the regulated asset base, as well as new revenues from development projects to construct substations and transmission lines for the benefits of the company’s customers. There was also an increase in revenues from Dawiyat Integrated Company due to the growth in subscribers’ base for FTTH connection, a decrease in financing charges in the income statement, an increase in the company’s share of profits on equity-accounted investees, and a decrease in the provision for receivables from consumption of electricity reflecting improved collections and sales seasonality.

The company clarified that these increases were partially offset by rising operations and maintenance costs due to business, asset growth and increased loads, along with higher general and administrative expenses, and an increase in Zakat provisions during the current quarter.

SEC’s CEO, Eng. Khaled Bin Hamad Al-Gnoon commented on Q1 2024’s results, saying:

” We are pleased with the positive results during the first quarter. The increase in regulatory return and the growth of the regulated asset base both had a positive financial impact on the company’s profits, and, by the grace of God, we were able to invest SAR 10.5 billion in capital investments in our company’s generation, transmission, and distribution projects, marking a 48% increase compared to the corresponding period last year. These investments align with our dedication to realizing the objectives of Vision 2030 and the Ministry of Energy’s goals towards sustainability, efficiency, and energy security. Supported by the kingdom wise leadership and generous backing from His Royal Highness the Minister of Energy, SEC continues to implement a series of leading projects to modernize and enhance the electricity distribution networks and transmission lines. These distinctive investments focus on deploying advanced technologies and assets to enhance the reliability and efficiency of the electrical grid, meeting the growing demands of developmental, economic, and urban initiatives in the Kingdom. Concurrently, they address the escalating need for electricity while advancing the sustainability efforts within the company and the broader sector, ensuring alignment with the national sustainable development goals and the company’s ambition towards carbon neutrality by 2050.”

In the first quarter of 2024, subscriber base continued to grow, with the company connecting electricity to approximately 87,000 new subscribers, bringing the total number of subscribers to around 11.1 million. During the period, the company successfully kept pace with the necessary expansion of the electrical network, with transmission and fiber optic network lengths growing at an annual rate of 4%, surpassing 97,000 circular kilometers, 92,000 circular kilometers, respectively. Additionally, the distribution network expanded by approximately 6% to reach 838,000 circular kilometers.

In February 2024, SEC announced the completion of a dual-tranche international sukuk issuance totaling $2.2 billion under its international sukuk program, which was listed on the London Stock Exchange. The first tranche was issued at $800 million for five-year sukuks, and the second tranche for ten-year sukuks valued at $1.4 billion. The sukuk offering garnered strong demand from international investors, with demand exceeding five times the offering size, reaching a total of $11 billion.

At the end of April 2024, SEC received approval for the regulatory weighted average cost of capital of 6.65% on its regulated asset base for the regulatory period spanning from 2024 to 2026. This approval bolstered the company’s revenue growth and net profit during the current quarter.