Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Taqa Morocco SA (CAS:TQM, Financial) reported a 2% year-on-year increase in adjusted EBITDA, driven by strong performance in the transmission and distribution segments.
- Net profit saw an 18% increase, supported by contributions from the oil and gas segments.
- Free cash flow nearly doubled year-on-year to AED4 billion, aided by positive working capital changes.
- The company announced an interim dividend of 0.7 fils per share, aligning with its declared dividend policy.
- Fitch upgraded Taqa Morocco SA's rating to AA, reflecting strong ties to the Abu Dhabi government and a resilient business model.
Negative Points
- Overall revenues declined slightly compared to Q2 2023, primarily due to lower contributions from the oil and gas and generation segments.
- The generation segment experienced a 6% year-over-year decline in revenues, mainly due to lower pass-through fuel revenue.
- The oil and gas segment saw a 39% year-on-year decrease in revenues, impacted by lower commodity prices and reduced production volumes.
- Net debt to EBITDA ratio slightly decreased to 2.3 times, indicating a need for careful debt management.
- The generation segment's adjusted EBITDA was 5% lower year-on-year due to higher general and administrative expenses and lower contributions from associates and joint ventures.
Q & A Highlights
Q: Can you provide more details on the expected production impact from the cessation of production in your North Sea assets?
A: The production decline in Q2 is primarily due to the cessation of production in some North Sea fields. This trend will continue with further cessations expected, leading to a continued decline into next year. - Steve Ridlington, CFO
Q: What are your thoughts on potentially returning to the bond market given the recent rate changes?
A: We are monitoring the bond market closely. Although we have sufficient liquidity through our revolving credit facility, we may consider approaching the market if favorable conditions arise in the third or fourth quarter. - Steve Ridlington, CFO
Q: Could you elaborate on the unplanned closures in the generation segment and the negative contribution from Masdar?
A: The negative contribution from Masdar is due to legacy asset price adjustments. As for unplanned closures, details are not shared, but planned closures were more significant. - Asjad Yahya, Head of IR
Q: How is the company managing its liquidity and debt profile?
A: We repaid $1 billion in corporate bonds, maintaining a controlled leverage and attractive cost of debt. Our net debt to EBITDA ratio is 2.3 times, with most of our debt at fixed interest rates and an average maturity of over 10 years. - Steve Ridlington, CFO
Q: What are the strategic goals for Taqa Morocco moving forward?
A: We aim to strengthen our utility businesses and explore both organic and inorganic growth opportunities. We are also committed to enhancing our ESG disclosures, including Scope 3 emissions reporting. - Steve Ridlington, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
