Saudi Electricity posted a better than expected 34 percent rise in its net profit during the typically positive and hot third quarter after an increase in electricity tariffs and a surge in power demand.
The Gulf's largest utility by market value made 2.32 billion riyals ($618 million) in the three months to Sept 30, compared with $461.3 million a year earlier, it said in a statement.
It was Saudi Electricity's highest ever quarterly net profit since its inception 11 years ago.
Half of the net profit increase was generated by a hike in power tariffs for commercial, government and industrial users in July, chief executive Ali Saleh al Barrak told Reuters.
Barrack said: "The other 50 percent came from a 20 percent rise in power consumption during the third quarter which coincided with a super hot summer season and the fasting month of Ramadan."
The state controlled company usually posts its best quarterly earnings during the second and third quarters of the year as hotter temperatures boost power consumption.
But Barrak said the impact from the new tariffs for some users is set to replicate itself in the upcoming two quarters. The new tariffs were introduced on July 1.
The firm made a net loss of $208.5 million in the first quarter of 2010 and $136 million in the fourth quarter of 2009.
The tariff hike was the latest government sponsored step to help the power utility cope with power demand growing at an annual 8 percent and requiring investments close to $80 billion between 2008 and 2018.
Strongly outperforming the all share and other sector indexes, shares in the firm have gained about 33 percent this year, with much of the advance made after the announcement of the higher tariffs.
The government granted the cash strapped firm a $4 billion soft loan in April to support its finances and ease the burden of lending from commercial banks. (Reuters)For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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