Dh1.1bn profit for Abu Dhabi’s Mubadala as global investments pay off

The strategic investment company owned by the Abu Dhabi Government recorded a net profit of Dh1.1bn in the first half of the year, and said it reached key milestones in the metals, satellite and renewable energy sectors.

Operational highlights for Mubadala have included the official opening of the Shams 1 concentrated solar plant in the Abu Dhabi Western region. Photo courtesy Mubadala

Mubadala’s first-half profit rose by more than 10 per cent to Dh1.1 billion helped by the performance of investments from microchips to aircraft parts.

The results did not reflect the impact of recent changes to Mubadala’s investment in the Brazilian conglomerate EBX. In July, Mubadala modified the terms of its US$2 billion investment in EBX as the group’s embattled owner Eike Batista restructures his business empire.

As the deal was struck after June 30, Mubadala’s EBX assets were still valued at their initial investment value in the latest results.

Net profit attributable to the group, a strategic investment company owned by the Abu Dhabi Government, rose from Dh984.7 million in the first half of 2012. Total comprehensive income rose from Dh1.1bn in the first half of last year to Dh2.1bn in the first six months of this year, the company said in interim financial results released yesterday.

“In line with our business plan, we reached key milestones within our portfolio during the first half of 2013, particularly in the metals, satellite and renewable energy sectors,” said Khaldoon Khalifa Al Mubarak, Mubadala’s chief executive. “We continued to grow our global platforms and made new investments into promising international markets.”

An operational highlight during the period was the inauguration of the Shams-1 concentrated solar plant in Abu Dhabi’s Western Region. The project, which supplies 100 megawatts of green electricity, was overseen by the renewable energy company Masdar, a subsidiary of Mubadala.

Another landmark was the announcement in June of a merger between Emirates Aluminium (Emal) and Dubai Aluminium (Dubal), the UAE’s two smelters.

Subject to regulatory approval, the move will make Mubadala an equal shareholder in the new entity, Emirates Global Aluminium, as well as creating 2,000 jobs by 2020.

In addition to domestic assets spanning renewable energy to satellites, Mubadala is also a shareholder in several multinational companies including GlobalFoundries, the semiconductor maker; General Electric; and the private equity firm Carlyle Group.

Mubadala’s revenues declined to Dh14.8bn during the first half of the year compared to Dh16bn in the same period last year. The firm said the slide was in large part because of one-off revenue rise related to semiconductor manufacturing last year and lower hydrocarbon revenues.

Operating income also dropped to Dh614 million, from Dh2.3bn in the first half of last year. It blamed climbing investment-related spending across the group, in particular a higher outlay on research and development.

Set up 11 years ago to spearhead the development of the emirate and maximise returns on oil, Mubadala has diversified its portfolio beyond an initial focus on hydrocarbons and into new regions.

In Brazil, it remains in close discussions as part of a consortium including the Dutch trading house Trafigura about buying assets of EBX’s iron ore unit, MMX Mineração e Metálicos.

The negotiations are focused on the consortium gaining control of MMX’s Sudeste Port and iron ore terminal west of Rio de Janeiro in exchange for US$400m of new MMX stock, according to a regulatory filing by MMX on September 10. Mr Batista is selling off chunks of his business empire because of faltering production and profitability amid an economic slowdown in Brazil.