Earnings Report /
Saudi Arabia

Saudi Electricity: Earnings call summary

  • The number of subscribers were up 4.0% yoy, taking the overall subscribers base to 10.7mn by the end of Q2 22.

  • Gross profit increased 1.3% yoy (+148% qoq) to SAR6.54bn.

  • Power generation capacity increased 1% yoy to 54.6GW.

SNB Capital
28 August 2022
Published bySNB Capital

 Operational performance

  • Q2 22 revenues increased 4.4% yoy (+43.4% qoq) to SAR19.40bn. The yoy growth is due to higher electricity sales and an increase in the number of subscribers, while the significant qoq growth is due to seasonal cyclicity.

  • Electricity sales grew 4.2% yoy to SAR17.37bn due to higher demand from the commercial, government and industrial segments.

  • Power generation capacity increased 1% yoy to 54.6GW and thermal efficiency improved by 20bps yoy to 37.0% by the end of Q2 22.

  • Transmission network grew by 2.9% yoy to reach 92.4k C.KM by the end of Q2 22.

  • The number of subscribers were up 4.0% yoy, taking the overall subscribers base to 10.7mn by the end of Q2 22.

  • The distribution network increased 5.4% yoy reaching 758.2k C.KM.

  • Fibre optic lines rose by 4.7% yoy to 83.3k KM while Dawiyat activated 28k FTTH connections during the period.

  • Electricity power volume was up 2.3% yoy reaching 137.9 Twh in H1 22 (134.8 TWh in H1 21) of which Residential contributed 47%, followed by Industrial (19%), Commercial (16%), Government (13%) and Other segments (6%).

  • In terms of electricity sales value, the Residential segment contributed 42%, followed by the Commercial and Government segments at 19% each and , Industrial at 16% and Others at 3% of the total H1 22 electricity sales of SAR28.62bn.

  • In terms of volumes of electricity sold the Residential, Commercial, Industrial, Government and Others segments increased by 0.2% yoy, 7.3% yoy, 1.9% yoy, 3.0% yoy and 6.5% yoy respectively in H1 22.

Q2 22 financial performance

  • Cost of sales increased 6.1% yoy (+18.0% qoq) to SAR12.86bn driven by higher fuel costs, purchased power expenses and operations and maintenance costs.

  • Gross profit increased 1.3% yoy (+148% qoq) to SAR6.54bn.

  • G&A expenses increased by 26.9% yoy to SAR256mn mainly related to the absence of recovery of training services from HRDF amounting to SAR120mn.

  • Operating profit declined 4.4% yoy (+165% qoq) to SAR5.86bn with a margin of 30.2%, vs 33.0% and 16.3% in Q2 21 and Q1 22, respectively.

  • EBITDA declined 3.4% yoy (+57% qoq) to SAR10.89bn with a margin of 56.1%, vs 60.7% and 50.4% in Q2 21 and Q1 22, respectively.

  • Net income before deducting the Mudaraba instrument’s share was SAR5.50bn, down 5.6% yoy (+263% qoq).  The yoy decline in net income was due to 1) higher receivable provisions booked in Q2 22 due to increased average ageing, 2) higher operating costs and G&A expenses.

  • Net income after deducting the Mudaraba instrument’s share was SAR3.59bn vs profits of SAR3.92bn in Q2 21 and a loss of SAR372mn in Q1 22. Net income margin stood at 18.5% in Q2 22 vs 21.1% in Q2 21.

SPPF carve out:

  • In June 22, SEC signed the Sale and Purchase agreement for the transfer of the ownership of SEC’s entire equity stake in Saudi Power Procurement Company (SPPC) to the government.

  • By the end of Q2 22, SEC classified fuel inventory of SAR842mn as held for sale, which is expected to be settled by the buyer.

  • SEC interest in IPPs is currently accounted as joint operations under IFRS. This will be de-consolidated in Q3 22. SEC expects to recognize these investments in IPPs under the equity method.

  • This transaction is not expected to have a material impact on the financial position of the company.

  • SEC will sell power to SPPC under the ECA ( Energy Conversion Agreement) and will buy power from SPPC as per the Bulk Supply Agreement (BSA) to sell to end customers.

  • The management clarified that through ECA and BSA, the performance can be tracked at each contract level.

Balance sheet and cashflows

  • Cash flow from operating activities increased 4.8% yoy to SAR21.2bn in H1 22 driven mainly by changes in working capital.

  • Trade receivables increased by 30.0% yoy to reach SAR3.10bn in H1 22, driven by increased receivables provision.

  • Capex stood at SAR6.2bn in Q2 22, up 5.1% yoy (+29.2% qoq) and taking H1 22 capex to SAR11.0bn.

  • SEC's asset base increased 1.0% from 2021 to SAR480bn, while total equity grew 0.4% from 2021 to SAR253bn.

  • Gross cash position declined 54.6% from 2021 to SAR 2.8bn, mainly due to the repayment of current portion of SUKUK.


  • The financial, regulatory, and structural reforms have been incorporated in SEC’s business enhancing its operations.

  • The regulatory reforms had a positive financial impact on SEC, increasing its cashflow and improving its credit rating.

  • SEC will continue to move steadily to achieve its strategic goals of enhancing customer experience and digital transformation.

  • The management affirmed that completing the smart meter project will help improve account receivables and collections in the future.

  • The provisions on aging receivables as recorded in Q2 22 (SAR400mn) is in-line with the principles of ECL modelling and IFRS 9. SEC will stop recording this in the future as it’s a function of SPPC which is in the process of being sold to the government.

  • The management clarified that purchased power cost is a pass-through cost as per the regulatory model.

  • All renewable projects are currently being awarded to the private sector. All of SEC’s generation capacity is oil and gas based.

  • The refinancing plan for Sukuk maturing early next year will be similar to that executed by the management for the Sukuks that matured this year.