Release Date: August 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ACWA Power Co (SAU:2082, Financial) reported a solid quarter with strong financial and operational results, showing significant growth in the first half of 2024.
- The company added more than 10 gigawatts to its portfolio, valued at SAR37 billion, aligning with its target to triple its size by 2030.
- ACWA Power Co (SAU:2082) has secured framework agreements with major PV module OEMs, covering over 60% of its needs for the next two years.
- The company achieved financial closures for three major projects, totaling SAR18 billion in the first six months of 2024.
- ACWA Power Co (SAU:2082) is focusing on strategic growth in key regions, including Saudi Arabia, Central Asia, and China, with a strong pipeline of projects.
Negative Points
- The company reported a fatality at a construction site in Uzbekistan, highlighting challenges in managing safety compliance in remote locations.
- General and administrative expenses increased significantly, from SAR273 million to SAR434 million, due to expanded operations and strategic initiatives.
- ACWA Power Co (SAU:2082) has increased its leverage ratio, which, while within guidance, reflects higher financial risk.
- The company is planning a $1.9 billion capital increase, indicating a need for additional funding to support its growth ambitions.
- There is uncertainty regarding the timeline for entering the Chinese market, with no specific projects announced yet.
Q & A Highlights
Q: What are the reasons behind the increase in general and administration expenses, and will it continue at these levels?
A: Abdulhameed Al Muhaidib, CFO, explained that the increase is linked to the Strategy 2.0 and the need to enhance internal capabilities. This includes managing more projects simultaneously and investing in long-term employee programs. The current level is expected to stabilize without further significant increases in the short term.
Q: What are your expectations for the company's performance in the second half of 2024, particularly in Saudi Arabia and abroad?
A: Abdulhameed Al Muhaidib, CFO, stated that while specific targets for the next six months are not disclosed, the company is maintaining its strategic focus and KPIs. The pipeline of development projects remains strong, and they are on track with their equity investment targets.
Q: Is there any plan to distribute dividends on a quarterly basis?
A: Abdulhameed Al Muhaidib, CFO, mentioned that while the company has successfully increased its annual dividend distribution, there are no current plans for quarterly distributions. The focus is on capital deployment for growth, with annual distributions being more efficient.
Q: When should we expect the first project in China, and how will returns compare with those in the Middle East and Central Asia?
A: Marco Arcelli, CEO, indicated that concrete results in China are expected by the end of the year. The opportunities in China are significant, and the company is confident in meeting its 2030 targets. Returns are expected to be competitive with other regions.
Q: Can you elaborate on the CCS-ready CCG plants and the impact on CapEx?
A: Marco Arcelli, CEO, explained that the CCS-ready plants are designed to incorporate CO2 capture technology as it becomes commercially viable. Currently, this readiness does not require a significant investment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
