TAQA Group Reports $3.68 Billion Net Income in H1-2023

State-owned TAQA, the Abu Dhabi National Energy Company, one of the largest listed integrated utilities in Europe, Middle East, and Africa (EMEA), on Monday announced that the group’s earnings in stood at $7.3 billion in H1 of 2023, 5% higher than the prior-year period, due to higher pass-through bulk supply tariffs and transmission use of system within the transmission and distribution (T&D) segment.

TAQA’s performance was driven by strong and stable returns from its long-term contracted utilities business whilst it has remained focused on delivering its growth strategy. The adjusted EBITDA was $2.86 billion, down 7%. This fall was led by a decline in contribution from the oil & gas segment on the back of lower realised oil and gas prices and reduced production.

Net income (TAQA share) was $3.68 billion, an increase of $2.5 billion, mainly driven by a one-off gain of $2.94 billion recognised on the acquisition of a 5% shareholding in ADNOC Gas, in part offset by a one-off $330 million deferred tax liability associated with the introduction of UAE corporate income tax from 1 January 2024.

Net income excluding these one- off items was $1.06 billion, 9% lower than the prior period, mainly due to lower contribution from the oil & gas segment. The capital expenditure was $570 million, 17% higher than the prior year as project execution picked up pace in the T&D segment.

The free cash flow generation was $1.74 billion, 23% lower compared to the previous year. The decline was mainly driven by a lower contribution from the oil & gas segment. The gross debt was $16.8 billion, unchanged on the amount outstanding at the end of 2022.

Strategic Highlights

One of the highlights for TAQA’s growth story is that it has announced entering into an agreements to acquire Sustainable Water Solutions Holding Company (SWS Holding). SWS Holding will add approximately $4.36 billion to TAQA’s existing asset value and is highly complementary to TAQA’s existing portfolio, creating a vertically integrated player adding strong capabilities in high-quality water treatment solutions to the Company’s expertise.

The Generation business line had a productive first half of 2023, underscored by its steady growth and expansion in the UAE and abroad. In the second quarter, the Company announced the financial closing for the Mirfa 2 Reverse Osmosis Desalination Plant (M2 RO).

TAQA is taking a leading stake in the project company holding a 60% share, and, delivering on its ambitions to expand its operations and maintenance (O&M) capabilities, TAQA will also take a 40% stake in the O&M company for the project.

Delivering on its promises to add up to 15 GW of power capacity internationally, TAQA announced a strategic partnership with Uzbekistan to explore opportunities for investment in the country’s power sector. These opportunities will include new and existing plants as well as associated infrastructure.

In the T&D business line, TAQA and ADNOC announced a $2.4 billion strategic project which will provide sustainable water for ADNOC’s onshore operations. TAQA and ADNOC will each hold a 25.5% stake in the project, which will be a centralised seawater treatment facility and transportation network for ADNOC’s onshore operations and will deliver 110 MIGD of nano-filtered seawater.

TAQA Chairman Mohamed Hassan Alsuwaidi said that through its strategic growth during the first half of 2023, TAQA continued to deliver value for its stakeholders. It has delivered a strong and consistent financial performance, maintained its investment grade credit rating, and ensured good returns for its shareholders through its dividend policy.

“TAQA has also grown both domestically and internationally in 2023, as well as in the renewable energy sector where it has exceeded its 2030 target of having 30% of its generation portfolio coming from renewable sources through the growth of Masdar. As such, TAQA continues to showcase the evolution and growth of the utilities sector, underpinned by its strong ESG commitments,” he added.