Dubai's vital utility provider, the Dubai Electricity and Water Authority (DEWA), reported a 15% decline in net profit for the first quarter of 2024. The profit decrease comes despite a rise in demand for electricity, water, and cooling services.
DEWA's net profit fell to $177 million (AED 651 million) in Q1 2024, compared to $208 million (AED 763 million) during the same period in 2023. This decrease is attributed to a significant rise in finance costs, which surged 39% year-on-year to $269 million (AED 269 million) in Q1 2024.
However, there were positive aspects to DEWA's financial report. The utility company experienced a 7% year-on-year increase in revenue, reaching $5. 8 billion (AED 5. 8 billion) in Q1 2024. This growth is directly linked to the rise in demand for DEWA's services. Gross power generation also reached a new high of 10. 3 terawatt-hours (TWh) in Q1 2024, reflecting a 6. 2% increase compared to the same period last year.
Furthermore, DEWA demonstrated strong cash flow management with a 26. 9% year-on-year increase in net cash from operations, reaching $3. 3 billion (AED 3. 3 billion) in Q1 2024. This indicates the utility's ability to generate cash to cover its operational needs and debt obligations.
The profit decline comes amidst a global economic climate of rising interest rates, which could potentially impact DEWA's future finance costs. However, the company's commitment to digitalization has resulted in customer savings of $128 million (AED 128 million) in 2023, demonstrating continued efforts to improve efficiency.
DEWA maintains its commitment to shareholder returns, with a plan to distribute a minimum annual dividend of $6. 2 billion (AED 6. 2 billion) over the first five years starting from October 2022. The dividends are paid semi-annually in April and October.
While DEWA grapples with rising finance costs, the company's positive revenue growth, strong demand for its services, and commitment to cost-saving initiatives suggest a resilient financial position. The coming quarters will be crucial in determining how DEWA navigates the global economic climate and ensures long-term financial stability.