SEC swings to profit after municipality fee exemption

DUBAI / Reuters

Saudi Electricity Co (SEC) swung to a first-quarter profit on Wednesday after a royal decree exempted the Gulf’s largest utility firm from municipality fees. The company, which the government is aiming to restructure to improve efficiency, made a profit of 4.94 billion riyals in the three months to March 31, a bourse statement said.
This compares with a loss of 798 billion riyals in the same period a year earlier, the company said. NCB Capital had forecast Saudi Electricity to make a quarterly net profit of 4.56 billion riyals. The company said the increase in profit came after a cancellation of accounts payable for municipality fees following a royal decree earlier this year.
Saudi companies issue brief earnings statements early in the reporting period before publishing more detailed results later. Like most Saudi publicly listed firms, SEC adopted IFRS accounting standards in January this year. The company said some of its figures have been restated as a result.
SEC’s results are acutely seasonal because of the big swing between power demand in winter and summer, when high temperatures lead most homes and businesses to use more air conditioning. The Saudi government last year decided to raise electricity, water and fuel prices to alleviate the burden of subsidies on its budget. SEC has said the price changes would roughly balance out in its earnings, as the rise in costs associated with higher fuel prices would offset increased revenue from electricity sales.