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Tabreed’s financial discipline and focus on deleveraging have positioned the district cooling utility for long-term stability, according to its Chief Financial Officer (CFO) Adel Salem Al Wahedi.
While growth remains the top priority, the ADX-listed company has adopted a prudent approach to managing its financial obligations, he told Zawya Projects in an interview.
Over the past 12 months, Tabreed has generated a robust free cash flow of AED 912 million ($248.30 million), yielding over 10 percent. This surplus has been strategically utilised to reduce debt by 12 percent in the first nine months of the year, improving the net debt-to-EBITDA [earnings before interest, taxes, depreciation, and amortisation] ratio to 4.0x as of the third quarter of 2024.
Al Wahedi highlighted Tabreed’s focus on debt repayment whenever surplus cash is available.
“Last year, we used surplus cash to close a loan for our plant on Al Maryah Island in Abu Dhabi, amounting to over AED 600 million ($163 million), well before its tenor ended,” he said.
The company has also been actively repurchasing its $500 million Sukuk issued in 2018. The 7-year Sukuk, listed on the London Stock Exchange (LSE), is set for repayment on 31 October 2025. To date, Tabreed has repurchased $239 million of the Sukuk, including $206.7 million in the first nine months of 2024 and $33 million in 2023.
“As for the remaining [amount], if there is surplus cash available from now until October next year, we will continue to repurchase. Otherwise, we will do refinancing,” said Al Wahedi.
Balanced financial strategy
The Tabreed executive emphasised that maintaining a balance between growth, investment-grade ratings, and consistent dividends is a cornerstone of the company’s financial strategy.
“We don’t have a strict KPI for deleveraging, but our first priority is growth, both organic and inorganic,” he explained. Maintaining investment-grade credit ratings from Fitch and Moody’s and honouring its dividend mandate are the other two main priorities.
On the other hand, debt continues to be the primary funding source for Tabreed's growth initiatives, supported by lenders' confidence in the company's 'cash-flow-positive operations, seasonally resilient business model, and predictable financial performance.'
"If we were to approach our debt ceiling and require additional capital, our shareholders have already expressed their readiness to inject equity if necessary. However, we are not currently in that position,” he said.
Financial performance
For the nine months ending 30 September, Tabreed reported a 1.5 percent year-on-year (YoY) increase in revenue to AED 1.85 billion ($504 million), while net profit surged by 49 percent YoY to AED 425 million ($116 million). This performance was driven by a 20.6 percent YoY-reduction in finance costs and lower income tax expenses.
Operational efficiencies and consistent demand for district cooling services sustained a stable EBITDA margin of 50 percent year.
“In our markets, cooling is not a luxury but a basic need, whether in residences, shopping malls, or offices,” Al Wahedi noted.
A favourable regulatory framework and robust tariff structures have provided predictability.
“While consumption charges are regulated and pass-through, our operational expertise built over 26 years allows us to maintain high service performance and generate healthy margins without compromising quality,” he said.
Most contracts include a CPI indexation mechanism, minimising inflationary risks. This year, though, volume growth helped offset compounded inflation impacts from 2023 (1.63 percent) and 2024 (4.8 percent).
Capacity expansion
During the nine-month period, Tabreed added 17,090 Refrigeration Tonnes (RT) of capacity, including 12,170 RT in the UAE, 3,000 RT in India, 1,500 RT in Egypt, and 420 RT in Oman. New loads connected during the third quarter stood at 12,444 RT, compared to 4,646 RT connected in the first half of 2024.
While recognising the growth potential in emerging markets, such as India and Egypt, which witnessed incremental capacity growth in the nine-month period, Al Wahedi emphasised the importance of client reliability and long-term partnerships in these regions.
“Our business is inherently long term, with concessions lasting 20 to 30 years, and in some cases, even up to 50 years, as seen in Downtown Dubai,” he said.
Mid-year, Tabreed had revised its capacity guidance for 2023-2024 to 100,000 RT, down from the earlier target of 120,000 RT.
“While the business fundamentals remain strong and the potential significant, external factors—such as regulatory approvals and extended client negotiations—can impact timelines due to processes and procedural requirements,” he explained.
Sustainability and ESG Initiatives
On the sustainability front, in the third quarter, Tabreed became the world's first district energy company to achieve Verified Carbon Standard status following a year-long assessment by Verra at its Abu Dhabi plant.
While this recognition enables the company to trade carbon credits in the voluntary market as a verified emissions reducer, Al Wahedi emphasised that the achievement is not so much about financial gains than about Tabreed’s commitment to ESG (Environmental, Social, and Governance) principles. Last year, for example, the company purchased solar-sourced clean energy certificates as part of its efforts to reduce emissions.
“District cooling itself is inherently an ESG-aligned business, embodying the core of the ESG concept as an industry,” he said, highlighting that district cooling provides 50 percent greater energy efficiency than conventional systems and significantly reduces CO2 emissions.
Tabreed is exploring renewable geothermal energy for district cooling with the UAE oil and gas giant ADNOC, building on the success of G2COOL, the region’s first geothermal-powered cooling plant in Masdar City. It is also collaborating with Abu Dhabi's TAQA Distribution and Dubai utility DEWA to increase the share of renewable energy powering its operations, though the goal of 100 percent clean energy sourcing remains challenging due to the dispersed nature of the cooling plants.
Al Wahedi pointed out that the company’s approach to ESG initiatives aligns with its disciplined financial strategy, testing new sustainable technologies before scaling them to ensure both operational and economic viability.
“As a publicly listed company with P&L responsibilities, we are accountable to our shareholders. This means balancing multiple objectives—financial growth, ESG commitments, and operational excellence,” he concluded.
(Reporting by Anoop Menon; Editing by P Deol)
(anoop.menon@lseg.com)
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