A Saudi power and water developer’s quarterly profit jumped 71% as plants it co-owns earned more, pulling its year back to roughly flat after a weak first half.
Acwa’s third-quarter net profit rose to 635 million Riyal ($169 million), the company said in a filing on Thursday. Revenue climbed 33% to 2.2 billion Riyal, and operating profit rose 88% to 1.1 billion Riyal.
Where the gain came from
Acwa pointed to bigger contributions from projects it owns with partners, higher gross profit and lower general and administrative costs. Those more than covered higher financing charges, project development expenses and acquisition costs.
The calmer picture
The quarter makes up for a soft start to the year. First-half profit had fallen 28%. Over nine months, profit is now up just 0.6% to nearly 1.3 billion Riyal, on revenue up 16% to 6.2 billion Riyal. Operating profit for the period fell 9%.
The bigger picture
Acwa is the Kingdom’s main vehicle for building power and desalination plants at home and abroad, and its pipeline is growing faster than its profits. It is spending heavily on new projects and acquisitions, and its earnings swing with when those projects reach financial close or start operating.
It is also looking beyond its usual markets. Last week, it teamed up with US investor EIG on a venture with about four billion dollars of equity to buy and build American power plants, as data centers lift demand.
Why it matters: one strong quarter doesn’t make a trend. Acwa’s results depend as much on project timing, partners’ performance and borrowing costs as on how much power and water it sells.
What to watch: whether the stronger quarterly earnings hold as Acwa funds a growing pipeline with more debt.
