Tabreed PJSC: Q3 2024 Earnings Call Unveils Revenue Growth and Strategic Expansion

Tabreed PJSC (DFM:TABREED), the UAE's leading international district cooling company, recently released its consolidated financial results for the first nine months of 2024. The earnings call highlighted significant revenue growth and strategic advancements, demonstrating the company's robust operational capabilities and commitment to sustainable growth. This article delves into the key factors contributing to Tabreed's strong performance and the implications for investors.

Tabreed's revenue growth in Q3 2024 was driven by a 6% year-on-year increase in consumption volumes, which helped normalised net profit before tax rise by 4% to AED 462 million. Group revenue increased to AED 1.85 billion, up from AED 1.823 billion in the same period last year. This growth was primarily due to new customer connections and expanded operations in the UAE, India, Egypt, and Oman. Notably, Tabreed added 17,090 Refrigeration Tons (RT) of new customer connections, with 12,170 RT in the UAE, 3,000 RT in India, 1,500 RT in Egypt, and 420 RT in Oman. This strategic expansion, coupled with a stable EBITDA margin of 50%, indicates a strong financial position for Tabreed.



Tabreed's international expansion strategy has significantly contributed to its revenue growth in Q3 2024. The company added 29,000 Refrigeration Tons (RT) of new connections over the past 12 months, with a substantial portion coming from international markets. Specifically, Tabreed connected new loads in India (3,000 RT) and Egypt (1,500 RT), demonstrating its commitment to geographical diversification. This expansion has not only increased Tabreed's total connected capacity to 1.318 million RT but also helped drive group revenue to AED 1.85 billion, a 6% year-on-year rise in consumption volumes. By expanding into new territories, Tabreed has successfully tapped into growing demand for sustainable cooling solutions, further solidifying its position as a leading international district cooling company.



Tabreed's achievement of 'Verified Carbon Standard' status in Q3 2024 is expected to have a positive impact on its revenue growth and future prospects. This recognition validates the energy efficiency of Tabreed's district cooling operations and reinforces the role of the district cooling sector in reaching net zero goals. As a result, Tabreed can now trade carbon credits in the voluntary market as a verified emissions preventer, opening up new revenue streams. Additionally, this achievement enhances Tabreed's reputation as a sustainable and responsible company, potentially attracting more environmentally conscious investors and customers, further driving revenue growth.

Tabreed's debt reduction of 12% in the first nine months of 2024, coupled with a net debt to EBITDA ratio of 4.0x, demonstrates a commitment to maintaining its 'investment grade' credit rating. This prudent management of debt has not only strengthened the company's balance sheet but also contributed to its revenue growth. By reducing debt, Tabreed has improved its financial flexibility, allowing it to invest in strategic expansion and new customer connections, which in turn drives revenue growth. The company's ability to generate strong cash flows, with free cash flows of AED 912 million over the past 12 months, further supports its financial health and growth potential.

In conclusion, Tabreed's Q3 2024 earnings call highlights the company's strong financial performance, driven by strategic expansion, energy efficiency, and prudent debt management. The company's commitment to sustainable growth and geographical diversification positions it well to capitalize on emerging opportunities in the international district cooling market. Investors should take note of Tabreed's robust operational capabilities and consider the company as a promising addition to their portfolios.