Riyadh, November 6, 2024 — The Saudi Electricity Company (SEC) announced an 18% year-on-year increase in net profit for the third quarter of 2024, reaching SAR6.9 billion, according to a press release issued today. The company also reported a 19% rise in revenues to SAR28.3 billion for the quarter, underscoring its strong financial performance and operational efficiency.
Context and Background
The Saudi Electricity Company is the Kingdom’s vertically integrated electricity service provider and the largest producer, transmitter, and distributor of electrical energy in the Middle East and North Africa. Its performance is closely tied to Saudi Arabia’s economic growth and the objectives of Saudi Vision 2030, which aims to diversify the economy and enhance sustainable development.
In the first nine months of 2024, SEC’s revenues grew by 17% to SAR66.6 billion, while net profit increased by 17% to SAR12.1 billion compared to the same period last year. This consistent growth reflects the company’s strategic investments and operational improvements.
Key Details
The improvement in Q3 2024 financial performance is primarily attributed to an increase in required revenue recognized during the quarter, driven by a higher regulated weighted average cost of capital (WACC), growth in the regulated asset base, an increase in electric power production revenues, and sustained growth in the subscriber base. Additionally, new revenue streams emerged from development projects to construct substations and transmission lines.
For the nine-month period, the growth was further supported by a reduction in financing charges and an increase in other income. However, these gains were partially offset by higher revenue costs due to business expansion, growing operating assets base, and higher loads, including recognition of cost of revenue for construction contracts under development for clients.
Enhanced resource management and improved efficiency in operating costs contributed to better control of operations and maintenance expenses, which increased only marginally despite overall business expansion and higher loads.
In July 2024, Standard & Poor’s revised SEC’s credit rating outlook from stable to positive, resulting in an ‘A’ rating with positive outlook, reflecting the company’s strong financial and strategic position and its alignment with the sovereign rating of the Kingdom. Moody’s and Fitch rate SEC at A1 with a positive outlook and A+ with a stable outlook, respectively.
Eng. Khalid AlGhamdi, Acting CEO of SEC, said: “The positive financial and operational performance during the third quarter and the nine-month period of 2024 reflects the growth of the company’s business and its operating asset base, alongside ongoing improvements in resource management effectiveness and operating expenses efficiency. This progress is further supported by continuous enhancement in key performance indicators related to the security, reliability, and diversity of energy supplies, as well as the reliability and efficiency of the electrical service.”
AlGhamdi added: “Guided by our pioneering role as a vertically integrated electricity service provider in the Kingdom, and our position as the largest producer, transmitter, and distributor of electrical energy in the Middle East and North Africa, we play a pivotal role in fostering a diverse and sustainable energy mix over the grid. We are successfully implementing substantial investments to support this rapid, and unprecedented pace of development at both regional and global scales. Furthermore, we are meeting rising demand for the electricity service and higher loads requirements driven by economic and demographic expansion in the kingdom while remaining steadfastly committed to increasing local content and localizing industry in alignment with the goals of Saudi Vision 2030.”
SEC remains committed to future growth investments aimed at enhancing service efficiency, quality, and reliability. Capital investments grew by 35% year on year in the first nine months of 2024 to reach SAR39.7 billion (including SAR14.6 billion in Q3 2024) compared to the same period last year.
At the recently held Energy Localization Forum, the company announced the signing of 46 localization agreements valued at over SAR54.7 billion, each with specific local content targets designed to enhance the sustainability of supply chains and promote localization within energy supplies.
In 2023, SEC made significant strides in its local content classification, achieving over 63.38% and exceeding the 2025 targets set by Saudi Vision 2030. This milestone follows the company’s receipt of the 2023 local content certificate from the Local Content and Government Procurement Authority.
The company has successfully completed several prominent financing transactions with a total value of approximately SAR41 billion since the beginning of 2024. These deals support ongoing investments for future growth.
SEC said it is actively pursuing advancements in sustainability, aligning with sector trends and objectives to enhance operational efficiency and the quality of electrical services while minimizing environmental impacts. This commitment also contributes to the Kingdom’s efforts to reduce carbon emissions.
In August 2024, the company announced a 43% increase in its Environmental, Social, and Governance (ESG) rating for the year, rising from 35 to 50 according to Standard & Poor’s “Corporate Sustainability Assessment”, one of the world’s leading ESG rating agencies. This annual evaluation is conducted to provide a comprehensive assessment of corporate sustainability efforts.
SEC also received two corporate social responsibility awards for 2024: the Gold Category Award for outstanding contributions and the Best Practices Award in the energy sector, organized by the Ministry of Human Resources and Social Development. The company said these awards recognize its ongoing efforts to adopt responsible practices toward society and the environment, as well as its social responsibility programs and initiatives, which are centered around three main pillars: health and well-being, environmental protection and renewal, and economic prosperity.
Implications and Impact
The strong financial performance of SEC has significant implications for Saudi Arabia’s economy and its energy sector. As the largest electricity provider in the MENA region, SEC’s growth reflects the Kingdom’s robust economic expansion and demographic trends, which drive higher demand for electricity. The company’s investments in infrastructure and local content align with Vision 2030’s goals of economic diversification and localization.
SEC’s improved credit ratings and successful financing transactions enhance its ability to fund future projects, supporting the reliability and sustainability of energy supplies. Moreover, its focus on ESG and social responsibility sets a benchmark for corporate practices in the region, contributing to broader sustainability efforts.
Vision 2030 Alignment
SEC’s achievements are closely aligned with Saudi Vision 2030, which seeks to transform the Kingdom into a diversified and sustainable economy. By increasing local content, localizing industry, and investing in capital projects, SEC is playing a vital role in achieving the vision’s objectives. Its commitment to sustainability and reducing carbon emissions further supports the Kingdom’s environmental goals. As Saudi Arabia continues to grow, SEC’s role as a key enabler of economic development and energy security will only become more critical.
20 Questions
Q1. What was SEC’s net profit in Q3 2024?
A1. SEC reported a net profit of SAR6.9 billion in Q3 2024, an 18% increase year on year, driven by higher revenues and operational efficiency improvements.
Q2. How much did SEC’s revenues increase in Q3 2024?
A2. Revenues increased by 19% year on year to SAR28.3 billion in Q3 2024, reflecting growth in regulated revenue and subscriber base.
Q3. What were SEC’s revenues for the first nine months of 2024?
A3. For the nine-month period, revenues grew by 17% to SAR66.6 billion, compared to the same period last year.
Q4. What was SEC’s net profit for the first nine months of 2024?
A4. Net profit for the first nine months of 2024 increased by 17% to SAR12.1 billion, demonstrating consistent financial growth.
Q5. What factors drove the increase in required revenue in Q3 2024?
A5. The increase was driven by a higher regulated weighted average cost of capital, growth in the regulated asset base, higher electric power production revenues, and subscriber growth.
Q6. What new revenue streams did SEC develop?
A6. New revenue streams came from development projects to construct substations and transmission lines, contributing to overall revenue growth.
Q7. How did SEC’s financing charges change in the first nine months of 2024?
A7. SEC benefited from a reduction in financing charges, which supported the improvement in financial performance during the nine-month period.
Q8. What credit rating action did Standard & Poor’s take in July 2024?
A8. S&P revised SEC’s credit rating outlook from stable to positive, resulting in an ‘A’ rating with positive outlook, reflecting SEC’s strong financial position.
Q9. What are SEC’s credit ratings from Moody’s and Fitch?
A9. Moody’s rates SEC at A1 with a positive outlook, and Fitch rates it at A+ with a stable outlook, aligning with the sovereign rating.
Q10. What did Eng. Khalid AlGhamdi say about SEC’s performance?
A10. He attributed the positive performance to business growth, improved resource management, and enhanced key performance indicators related to energy supply and service reliability.
Q11. How much did SEC’s capital investments grow in the first nine months of 2024?
A11. Capital investments grew by 35% year on year to SAR39.7 billion, including SAR14.6 billion in Q3 2024, supporting future growth.
Q12. What localization agreements did SEC sign recently?
A12. At the Energy Localization Forum, SEC signed 46 localization agreements valued at over SAR54.7 billion, with specific local content targets.
Q13. What was SEC’s local content classification in 2023?
A13. SEC achieved over 63.38% in local content classification, exceeding the 2025 targets set by Saudi Vision 2030.
Q14. How much financing has SEC completed since early 2024?
A14. SEC has completed financing transactions totaling approximately SAR41 billion since the beginning of 2024, supporting ongoing investments.
Q15. How did SEC’s ESG rating change in 2024?
A15. SEC’s ESG rating increased by 43%, from 35 to 50, according to S&P’s Corporate Sustainability Assessment, reflecting improved sustainability efforts.
Q16. What CSR awards did SEC receive in 2024?
A16. SEC received the Gold Category Award for outstanding contributions and the Best Practices Award in the energy sector from the Ministry of Human Resources and Social Development.
Q17. What are the pillars of SEC’s social responsibility programs?
A17. SEC’s social responsibility programs are centered on health and well-being, environmental protection and renewal, and economic prosperity.
Q18. How does SEC contribute to Saudi Vision 2030?
A18. SEC supports Vision 2030 through local content development, industry localization, capital investments, and sustainability initiatives, enhancing economic diversification.
Q19. What is SEC’s role in the region’s
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