Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The utility segment performed well, with the consolidation of SWS Holding enhancing the underlying performance.
- Adjusted EBITDA increased by 2% year-on-year, driven by transmission and distribution and SWS.
- Net profit saw an 18% increase, supported by contributions from the oil and gas segment.
- Free cash flow nearly doubled year-on-year to AED4 billion, aided by positive working capital changes.
- The company improved its ESG disclosure standards by reporting on Scope 3 emissions.
Negative Points
- Overall revenues declined slightly compared to Q2 2023, mainly due to the oil and gas and generation segments.
- The oil and gas segment experienced a 39% year-on-year decrease in revenues due to lower commodity prices and reduced production.
- Generation revenues decreased by 6% year-on-year, primarily due to lower pass-through fuel revenue in Morocco.
- The oil and gas segment's adjusted EBITDA fell by 23% due to lower commodity prices and reduced production.
- The group-wide average interest cost increased slightly to 4.8%, impacted by the repayment of corporate bonds.
Q & A Highlights
Q: Hi, thanks for the presentation. Luke here from Barclays. I was just wondering on the oil and gas segment. I noted your comment in the release saying that another cessation of production from one of your assets in September. So I'm just wondering how much of a production impact you would expect from that. And if you expect production to be less volatile following the decommissionings that you've had in the UK assets? Thank you.
A: Yes. Okay. Thank you. Well, the production decline that we've seen in the second quarter this year compared to last year is almost all as a result of cessation of production in some of the Northern -- North Sea fields in the UK. And that will continue and there will be further cessation of production in all of our North Sea fields Northern -- North Sea fields in the coming months and year. So I think you can expect that decline that we've seen to continue into next year.
Q: Yeah. I mean maybe just going back to, yeah, your potential force in the bond market. Obviously, we've seen rates come down quite a bit in the last couple of months. So any updated thinking on potentially returning to the bond market would be helpful. Thank you.
A: Yes. Thanks, Luke. Well, yes, I mean, I agree with you. It has been a very helpful development as far as we're concerned. We did update our filings in the middle of the year. I'm sure you would have seen that. So we remain ready to approach the markets as of when we need. We haven't needed to so far, and we still have sufficient liquidity in our revolving credit facility to fund what we need to do through the rest of the year as far as we can see it. But that doesn't mean that we won't go to market. It's something we'll keep an eye on. And I think potentially, if we have favorable market conditions in the fourth -- the end of the third quarter to fourth quarter, we may well approach the markets at that point in time. But it's a decision we haven't yet finally taken.
Q: Okay. Great. Yes. [Yi Shi] here. Thanks so much for having the call. So I have two quick questions. One is you mentioned some unplanned closures in the generation assets this quarter, I believe. So I just wanted to see if there's -- if we can get a little more color on what that is and maybe the size of that impact? And then also, you mentioned Masdar had, I think, negative EBITDA this quarter. So also wondering maybe what caused that?
A: Okay, I'll start with the Masdar one. So Masdar, it's not EBITDA. So to be clear, it comes in as we take the contribution of our associates and JVs as part of adjusted EBITDA, as you've seen consistently. So it's their share of income coming to us. That was negative for the quarter, mainly because there were some legacy assets from before the transaction will be entered, which had some asset price readjustments served to them. This is more on the North African side of the business. So none of the newer businesses. This is more legacy portfolio cleanup, which is having an accounting impact, so to speak, on that. On the unplanned closures, I'll get back to you. We don't have -- we haven't shared the details of the breakup. I just need to check if I'm allowed to, and I can get back to you on that with it. The site was with the planned ones which were more significant, the unplanned ones were to be less significant.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
