SEC reports Q3 and 9-month 2023 financial results with growth and challenges
Riyadh, November 07, 2023, Saudi Electricity Company (SEC) has unveiled its financial performance for the third quarter and the first nine months of 2023. The results reflect a robust period of growth, driven by increased demand for electrical energy during the summer season and ongoing expansion efforts.
In the third quarter of 2023, SEC reported operating revenues of SAR23.8 billion, a 4.6% increase compared to the same quarter in the previous year. This impressive revenue growth can be attributed to a 10% surge in electricity demand during the summer season, as well as the continuous growth of their subscriber base. Furthermore, increased revenue from the transmission system was fueled by higher subscriber usage and the positive performance of Dawiyat Integrated Telecommunications & Information Technology Company, a wholly-owned subsidiary of SEC. This was largely due to the growing utilization of FTTH fiber optic connections.
While operating costs saw a 5.3% year-on-year increase, driven by business expansion and heightened demand, the company's revenue growth managed to outpace these cost increases. Consequently, the gross profit for the quarter increased by 3.3% to reach SAR7.7 billion.
In terms of net profit, the third quarter saw a decrease of 8.3%, falling to SAR5.8 billion. This drop was primarily attributed to increased finance costs resulting from global interest rate hikes and additional funding for capital projects. Additionally, the company's quarterly booking of Zakat provisions contributed to the decline. Basic and diluted earnings per share for the third quarter of 2023 also decreased, falling from SAR1.07 to SAR0.94 when compared to the same period in the previous year.
For the first nine months of 2023, SEC reported operating revenues of SAR56.9 billion, marking a 2.2% increase compared to the same period in the previous year. However, gross profit for this period decreased by 6.7% to SAR15.6 billion, and operating profit was down 3.4% year-on-year, reaching SAR14.7 billion. Net profit for the nine-month period amounted to SAR10.3 billion, down 22.8% year-on-year.
At the end of the third quarter of 2023, the company's total equity stood at SAR260.9 billion, with an annual growth rate of 0.7%.
The decline in net profit for the nine-month period was primarily due to higher operations and maintenance costs resulting from increased demand, business expansion, asset growth, enhanced maintenance programs, and new projects. Rising finance costs also played a role in the decrease, though this was partially offset by higher operating revenues driven by increased demand for electrical energy, ongoing subscriber base growth, and increased transmission system revenues from higher subscriber loads.
Commenting on the financial results, CEO of Saudi Electricity Company, Eng. Khaled bin Hamad Al-Gnoon, highlighted the company's successful management of the substantial growth in electricity demand during the summer season. He noted that this growth was indicative of the Kingdom's economic vitality and its successful implementation of Vision 2030 programs.
Al-Gnoon also emphasized the company's ambitious investment strategy, which aims to inject a total of SAR500 billion by 2030 to enhance electrical services and support the objectives of Vision 2030. He pointed out the company's expansion plans, including investments in the Electric Vehicle Infrastructure Company, power plants, and an expanded Rabigh power plant, which reinforce SEC's leading position in the electricity generation sector in the Kingdom.
These achievements and continuous service quality improvements have been made possible through the significant support from the government and the guidance of key figures in the Kingdom, ensuring the development and enhancement of services for subscribers.
It's worth noting that SEC has successfully issued dual-tranche Sukuk worth $2 billion in April last year, as part of its international Sukuk program. Furthermore, the company entered into an international syndicated facility agreement worth $3 billion to support its investment plans and strengthen its financial position. These measures are expected to bolster its financial position and revenue growth prospects, as the company continues to play a crucial role in meeting the Kingdom's energy needs and driving economic growth.