Tabreed Q2 earnings growth fails to impress market

Tabreed's quarterly results have not sparked fireworks on the DFM.

The share price of the National Central Cooling Company (Tabreed) failed to respond to strong increases in Q2 revenue and net income, as a recapitalisation scheme and the prospect of share dilution dampened investor appetite.

Net income of the Abu Dhabi-based district cooling company rose to AED40.3 million, more than double the figure posted a year earlier. Revenue increased by 35% to AED247.7 million.

Tabreed attributed the strong performance to a growth in the core business of providing chilled water, resulting from more cooling plants coming online and an increased customer base.

In the second quarter, Tabreed added four plants to its fleet, bringing the total to 44, 10 more than a year earlier. Installed cooling capacity rose to 449,625 (gross) TR, from 352,100 TR a year ago.

“Our strategy has been to focus on the core business of chilled water, and these robust first half results reflect growth in the Company’s chilled water business and improved operational efficiencies,” said Sujit S. Parhar, Tabreed’s CEO.

But profits were also boosted by the revaluation of a convertible sukuk, which added a non-cash, non-operational gains of AED7.1 million to the profit margin. Without these gains, net profits for first six months of 2010 would have been up a mere 3% yoy, not the current 83%.

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