Abu Dhabi: Abu Dhabi National Energy Company (Taqa) swung to a first quarter profit in 2017 helped by higher oil and gas prices, and cost cutting, the company said in a statement on Thursday.
Taqa’s share price closed at Dh0.63, up 12.5 per cent following positive first quarter results on Thursday.
The Abu Dhabi-listed company made a net profit of Dh77 million in the first quarter of 2017 compared to a net loss of Dh608 million in the first quarter of 2016.
Taqa has been making losses in the last two years when it made its last quarterly profit in the first quarter in 2015.
Revenues also went up with the company reporting Dh4.1 billion for the first quarter of this year, up 6 per cent when compared to the first quarter revenue of Dh3.9 billion last year due to higher oil and gas prices.
Oil prices have gone up by more than 60 per cent since the first quarter last year due to measures taken by oil producing countries to cut production to stabilise oil prices.
Brent averaged $54 per barrel in the first quarter of 2017 as against $34 a year ago. Similarly, gas prices went up by 57 per cent in the first quarter when compared to the first quarter of last year, according to Taqa.
Commenting on the results, Saeed Al Daheri, acting chief operating officer said: “The transformative cost reduction initiatives are now substantially embedded across the organisation and with the balance sheet stabilised, we are now well positioned to secure future growth as market conditions stabilise and improve.”
Taqa¸ which is 74 per cent owned by Abu Dhabi Water and Electricity Authority (Adwea), is active in 11 countries in power generation and oil and gas sectors. It produced 132,200 barrels of oil equivalent per day in the first quarter of 2017, down by 14 per cent on last year’s first quarter figure of 153,700 barrels of oil equivalent per day due to 70 per cent reduction in oil and gas capital expenditure.
Global power generation also declined at 16,413 gigawatts in the quarter compared to 17,022 gigawatts in the first quarter of 2016.
UAE operations produced 12,336 gigawatts of electricity and 57,216 million imperial gallons of desalinated water-stable compared to first quarter of last year.
In a conference call with the analysts, Mohammad Al Ahbabi, acting chief financial officer of Taqa, said the two-year transformation programme has clearly been a success with the savings sustainably embedded in the organisation.
“We have strong liquidity, and with the land transfer from Adwea last year, our balance sheet has received the required support.”
To mitigate lower commodity prices, Taqa implemented a two-year transformation programme, which was completed in 2016, to cut costs and deliver total savings of Dh13.2 billion.
This included a capital expenditure reduction of Dh8.6 billion from 2014 till 2016, and over 1,000 jobs across the company’s global operations, reducing headcount by 25 per cent.
Last month, Taqa said 15 million square metres of land valued at Dh18.7 billion was transferred from Adwea to Taqa, which is expected to generate significant cash for the company in the long term.
Total debt was reduced by Dh675 million during the period while interest paid reduced by Dh174 million.
The company is planning to increase capex to Dh1.8 billion this year in line with commodity price recovery.
