Lower fuel prices hurt Taqa profits

Net profits at Abu Dhabi National Energy (Taqa) fell 90 per cent last year as a result of lower oil and gas prices and the firm's efforts to reduce its debt burden.

Net profits at Abu Dhabi National Energy (Taqa) fell 90 per cent last year as a result of lower oil and gas prices and the firm's efforts to reduce its debt burden. The company registered a net loss in the fourth quarter. After two years of buying power stations and oil and gas assets under its former chief executive, Taqa is now focused on reducing its debt and integrating its portfolio on four continents, said Carl Sheldon, the general manager. "We shifted into a new phase of our growth strategy, evolving from an acquisitive company into one focused on organic growth and asset optimisation," he said. "We have substantial opportunity to drive organic growth within our business."

Net profits fell to Dh183 million (US$49.8m) from Dh1.83 billion in 2008, according to preliminary data released yesterday, even as total revenues rose 0.8 per cent to Dh16.9bn. The company posted a net loss in the fourth quarter of Dh83m after registering a profit of Dh266m for the first three quarters of the year. Taqa's steady income from its power stations in the UAE was offset by lower prices for its oil and gas production in North Africa, Europe and Canada.

The average spot price for West Texas Intermediate crude, the global benchmark, was $61.95 a barrel last year, down from $99.67 a barrel in 2008. Natural gas prices fell by more than half in the US, and less in Europe. Taqa was hit with two impairment charges in the fourth quarter after marking down the value of its oil and gas reserves. In the North Sea and Canada, it recorded two after-tax charges that totalled Dh228m. The company last year completed several major acquisitions that had been in the works for years, but indicated it did not plan to continue its spending spree.

Instead, it bought back bonds due in 2036, saving itself Dh260m for the year, and issued shorter-term five and 10-year notes worth $1.7bn to cover the completion of acquisitions in the first half of the year. The firm's acquisition-hungry chief executive, Peter Barker-Homek, stepped down in October. Mr Sheldon said the firm had reduced its debt burden to 82 per cent of capital from 88 per cent at the end of 2008, and held a long-term goal of reducing the proportion further to 70 per cent. Taqa also repurchased 158.7 million shares to boost the firm's stock price, and has the option of buying back up to 463.8 million more shares under a buyback programme announced in February last year.

@Email:cstanton@thenational.ae

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