Tabreed aims for 9% revenue growth this year amid ‘aggressive’ global expansion plans

Company plans to use India as a springboard to expand into Southeast Asia, CEO says

Staff on the control panel at a Tabreed Cooling Plant, Abu Dhabi. The company hopes to maintain its annual revenue growth rate of 9 per cent this year. Khushnum Bhandari / The National

The UAE's National Central Cooling Company, also known as Tabreed, hopes to maintain its annual revenue growth rate of 9 per cent this year while pursuing “aggressive” expansion in international markets, the company’s chief executive said.

Tabreed, which operates in Saudi Arabia through its subsidiary Saudi Tabreed, aims to take a “lion’s share” of the district cooling market in the kingdom amid a construction boom, Khalid Al Marzooqi told The National on Thursday.

The Public Investment Fund, Saudi Arabia’s sovereign wealth fund, owns a 30 per cent stake in Saudi Tabreed.

“India is another market that we are pursuing very aggressively as well. [The] good thing is that we have a base there now,” Mr Al Marzooqi said.

Last year, the company announced an investment of Dh44.34 million ($12.1 million) to acquire cooling infrastructure at Tata Realty’s Intellion Park development in Gurugram. Tata Realty is the real estate and infrastructure development arm of Indian conglomerate Tata Sons.

“We may be expanding our co-operation with Tata Realty for more [cooling] plants there,” Mr Al Marzooqi said.

India, the world’s most populous country, will also serve as a springboard for the company to expand into Southeast Asia, home to several fast-growing emerging economies.

Tabreed took five years to establish an “actual presence” in India and growing operations in countries such as Indonesia, Malaysia and Thailand may require the same amount of time, Mr Al Marzooqi said.

“Initially, whenever you enter [new] markets, you basically circulate the money within that market until it reaches … that critical mass,” he said.

“But, right now, it's all about increasing the footprint … and the know-how, because these are completely different markets than [the one] we have in the UAE. It’s a game of knowing the risks.”

Given the uncertainty, Tabreed prefers forming joint ventures with local entities to understand the markets better, but is also open to acquisitions, Mr Al Marzooqi said.

Founded in 1998, Tabreed owns and operates 90 plants in its portfolio across the GCC, including 75 in the UAE, five in Saudi Arabia and seven in Oman.

The company’s expansion comes as rising populations, warmer temperatures, and global commitments to lowering emissions support district cooling demand in many regions of the world.

The global district cooling market is projected to reach about $44.5 billion by 2030 from $28.19 billion last year, recording a growth of 6.7 per cent per year, Fortune Business Insights said.

Tabreed on Thursday reported a net profit of Dh431 million ($117 million) in 2023, down 28 per cent from a year earlier, due to a tax liability of Dh359 million following the enactment of the UAE's corporate tax law, the company said in a filing to the Dubai Financial Market, where its shares are traded.

However, the company’s revenue grew 9 per cent to Dh2.42 billion last year, driven by new connections and higher demand from existing customers.

Tabreed said it added 53,000 refrigeration tonnes of new connections in 2023 across the UAE and internationally.

“Expansion was driven largely by organic growth, through new connections in existing concession areas, as well as new greenfield plants,” it said.