Nebras Energy Q.P.S.C. (QEWS) Earnings Call Transcript & Summary

Hello, and welcome to the Qatar Electricity & Water Company 2024 Conference Call. Please note that this call is being recorded. [Operator Instructions] I'd like to turn the call over to Bobby. You may begin.

Yes. Hi. Thank you, Angela. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Qatar Electricity & Water Company's Third Quarter and 9 Months 2024 Results Conference Call. So on this call, we have Shahzad Iqbal Gill, who is the Chief Finance & Planning Officer at QEWC; and Dan Sabitov, who is the Corporate Planning, Performance and IR Manager. So we will conduct this conference with management first reviewing the company's results followed by Q&A. I would now like to turn the call over to Shahzad. Shahzad, please go ahead.

Thank you very much, Bobby. Good afternoon, everyone. Thank you for joining QEWC's Q3 and 9 months results call. I will start with a snapshot of our results that we posted in Q3. I'll go through that quickly, then we'll get into the details of year-to-date and quarter results with Daniyar, and then we will open the call for the questions. So earlier today, we had posted the materials on our website and on QNB's website. So I'll go through Slide #4 first, where we have revenues for Q3 for the group. We posted the revenues at QAR 834 million for Q3 compared to QAR 798 million in the same period last year. The net profit for quarter 3 2024 is QAR 509 million compared to QAR 340 million for the same period last year. If we look at year-to-date results, revenue for the 9 months is QAR 2.265 billion. And compared to last year, it was -- in last year, it was QAR 2.178 million (sic) [ QAR 2.178 billion ]. Net profit for year-to-date 2024 is QAR 1,189 million compared to QAR 1,109 million. I'll get to the next slide where we will analyze how these stack up with last year's performance. So you would see year-to-date 9 months revenue, QAR 2.265 billion is 4% higher than last year same period. EBITDA is reported at QAR 1.017 billion, which is 5% higher than last year. And if we look at net income, we are QAR 1.189 billion we have posted for 9 months, which is 7% higher than last year. There's a snapshot of the capacity figures here. I'll just run through that. For the power capacity operational, gross is 20.1 gigawatt. If we look at net, which is ownership adjusted, this is at 8.5 gigawatt at the end of September. For water capacity, gross 541 MIGD, net 392 MIGD. Renewables, gross 4.3 gigawatt and net 1.1. We have capacity under construction, gross 3.2 gigawatt and net ownership adjusted 1.1 gigawatt. Moving on to the next slide. I'll move to Slide #7, where we have comparisons of dispatched water and power. Sent out water is 5.3% higher and sent out water was 1% higher in the 9 months up to September. You would see slight decrease in the power availability, but that is due to the planned outages in the year. Water availability is at the same level as last year. Moving on to the next slide, Slide #8. Here, we have comparison -- high-level comparison of revenue, EBITDA and net profit. Revenue of QAR 2.265 billion versus last year QAR 2.178 billion, and this is due to the sent out Water and Power. We'll get into the details of the numbers later on. EBITDA, QAR 1.017 billion versus QAR 972 billion -- sorry, QAR 0.972 billion last year. And net profit, QAR 1.189 billion versus QAR 1.109 billion. Earnings per share posted at the end of September, QAR 1.08 versus QAR 1.01 last year for the same period. Here, I will hand the call over to Dan, who will take you through the details of the numbers.

Thank you, Shahzad, and good afternoon, everyone. Today, I'll first cover year-to-date performance in more detail, followed by third quarter results. Turning to Slide 9, gross profit increased from QAR 663 million last year to QAR 715 million this year for the same reasons explained by Shahzad, partially offset by higher operating costs, mostly gas consumption. EBITDA increased by 5% and reached QAR 1.017 billion this year. Main drivers for the increase were higher gross profit and interim dividends in the third quarter of 2024 from available-for-sale investments. As you can see on Slide 10, share of profit from our joint ventures and associates increased by QAR 78 million in comparison to last year results, which is primarily driven by higher gross profit and lower finance costs of Ras Girtas Power, a joint venture in Qatar, start of commercial operations of SUNPower plant this year, additional share in 2 gas power plants in Jordan and the results of U.K. wind portfolio that we acquired in December 2023. Interest and other income decreased from QAR 438 million to QAR 390 million this year. Decrease is explained by lower interest income on deposits from lower cash available. As you may remember, QEWC repaid all short-term loans in 2023. As for other income, one-off items and other drivers largely offset each other. Net profit was QAR 1.189 billion, which was QAR 80 million higher compared to the same period of last year. In addition to the drivers previously explained, net profit benefited from lower finance costs, partially offset by a gain on sale of Siraj Energy in 2023 and higher income tax expense this year. A snapshot of third quarter results in comparison to the same period of last year is presented on Slide 11. I'll give more detailed overview in the next 2 slides. Now turning to Slide 12, both revenue and gross profit increased by 5% and 11%, respectively, versus last year. This was driven by higher sent out power and higher tariffs as per contracts. Higher EBITDA for the third quarter for this year is due to similar drivers as well as interim dividends from available-for-sale investments received this year. Now turning to Slide 13, higher share of profit from JVs and associates, mainly driven by better performance of assets in Qatar, reversal of FX losses in SUNPower plant, higher generation and sales of green certificates in Moorabool wind farm Morabbul wind farm and other drivers. Lower interest and other income is largely due to low interest on deposits, development fee received in Q3 last year partially offset by interim dividends from available-for-sale investments in Q3 this year. Higher net profit driven by the items previously explained and lower finance costs, partially offset by higher income tax expense this year. Now moving to financial position on Slide 14. The total assets of the company stand at QAR 23 billion with almost no change from last year. 17% decrease in cash is mainly due to payment of dividend for 2023 and interim dividend for 2024 by QEWC. Increase in value of available-for-sale investments driven by the change in market price of shares. Turning to Slide 15, total equity of the company remained almost the same at QAR 15 billion. QAR 1.2 billion net profit was offset by dividends declared and paid this year. Net debt position increased from QAR 3 billion to nearly QAR 3.7 billion, driven by the change in cash explained previously, while total debt remained at QAR 6.8 billion. So with that, we'll open up questions. Over to you, Bobby.

Okay. Thank you, Dan. Angela, can we open up the call to questions, please? Thank you.

[Operator Instructions] Your first question comes from the line of [ Ashish Agarwal with the First Investor ].

I have a question related to your finance costs. So, I believe -- I believe it is because of the one-off from the FX gains. Can you please confirm the number? Is it QAR 73 million one-off just in the third quarter itself?

Yes, I can confirm, it's QAR 73 million in third quarter only.

Yes. So now if I may just ask as a follow-up, what sort of run rate should I expect going into the fourth quarter, both with respect to your finance cost as well as your overall net income for the group?

So in terms of finance costs, FX gains and losses, of course we are not going to comment on that. But otherwise the finance costs taking out debt last year that we paid is going to be pretty consistent based on the project that we have. So you can estimate from there.

I'll just jump in here. The [ QAR 70 million ] Shahzad mentioned is for quarter only. QAR 70 million is the overall decrease in finance costs, inside of this QAR 48 million is related to variance in FX gain and loss.

Sorry, could you please repeat that?

Yes. So total variance in finance cost for the quarter, quarter-over-quarter is QAR 70 million. Yes. Out of this QAR 48 million is driven by FX.

Okay. And QAR 48 million is driven by the FX?

Correct.

Okay. So that QAR 70 million plus QAR 48 million, which is QAR 118 million is you are referring to as the total finance cost for the third quarter of '24?

No. The total...

No, total is QAR 70 million.

Total variance is QAR 70 million. Out of this, QAR 48 million is FX.

Okay. Out of that, QAR 48 million is FX, you're saying?

Yes.

Okay. Okay. All right. And could you please comment on -- okay, fine. I mean it's like -- I'm a bit unclear on the guidance for the finance cost. I mean I did see your cash flow statement and the loan repayments you have done. So -- and I believe that loan repayment, correct me if I'm wrong, it belongs to your outside Qatar subsidiary, which is of Nebras, I believe.

No, that's not correct. The loan repayments were in Qatar at QEWC level, corporate level.

Okay. QEWC level, corporate level. Okay. All right. Can I just ask you plain and simple, like what's your weighted average cost of debt after this loan repayment?

Weighted average cost of debt, I would suggest to send a question to Daniyar, then -- and we will let you know. I don't have the number.

Your next question comes from the line of Seki Mutukwa with Ashmore.

I hope you can hear me. Two questions, please, and apologies if you addressed this already earlier. But what were the drivers of the increase in sort of sent out power over the period? Just perhaps to understand if the sort of growth in demand or there's some other easier explanation? And then the other bit is just a reminder, please, on the key commissioning dates for this incremental capacity you flagged in the presentation under construction.

Yes. So sent out power is driven by higher demand by the off-taker and better availability at our end also. And getting to the COD dates, we have 2 under construction projects in Uzbekistan at the moment. And expected COD dates for first one, which is [indiscernible] is Q1 2026 and the other one, which is [indiscernible] is '27 -- Q3 2027.