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Saudi Electricity has posted a 50 per cent rise in second-quarter net profit thanks to lower costs and higher revenues with further gains expected after a rise in power tariffs for some users. The Gulf's largest utility by market value made US$285.3mn in the three months to the end of June compared with US$191mn riyals a year earlier, according to a statement to the Saudi bourse. This figure is 13 per cent higher than analysts' forecasts.
"The increase in the net profit stems from an increase in revenues and a decline in some operating costs," the statement said, adding that operating profit rose 55 per cent. Chief executive Ali Saleh Al Barrak was quoted by Gulf Daily News as saying that sales rose 14 per cent in the first half while the start of several new power plants improved productivity and lowered maintenance costs
The state-controlled company traditionally enjoys its best quarterly earnings during the second and third quarters due to the hotter climate, and subsequent energy demand from air conditioners, causing a spike in power consumption.
Saudi Electricity applied higher tariffs for government, commercial and industrial users from July 1st boost the company's profitability. This was the latest government-led step by the power utility to cope with power demand that is growing at an annual rate of eight per cent and is expected to require around US$80 billion worth of investment by 2018.