Tabreed takes a blow but maintains its cool

There was little obvious good news when the National Central Cooling Company, or Tabreed, announced a surprise Dh1.12 billion loss yesterday. Investors reacted accordingly, sending the shares down by 9.5 per cent to Dh0.57. But some analysts saw past the immediate shock to find glimmers of hope on the horizon. Most important is that Tabreed is restructuring to be able to handle the requirements of Plan Abu Dhabi 2030.

Scott Darling, an analyst at Nomura Securities, said in a research note that Tabreed had had "very disappointing" full-year results, but it had shown it was starting to get a handle on its cost A Dh1.3bn loan from Mubadala Development, also announced yesterday, was a sign that the Government considered the company an important strategic asset, Mr Darling said. That is no small thing. As the Abu Dhabi Government's preferred builder and operator of the cooling plants that service multiple buildings, the company could have a lot of business in store in the years ahead. Tabreed's fortunes are tied strongly to those of the regional property sector. The company builds and operates district cooling plants, which chill water and pump it through pipes to surrounding buildings for air conditioning. Places such as Reem Island and Yas Island - each with a large number of new buildings - have hired Tabreed to build large plants to provide air conditioning.

The problems for the company could be chalked up to bad timing - it was in the midst of a host of projects when the economic slowdown hit, leaving it vulnerable to the tightening up of financing and the scaling back of property developments that occurred across the region. A new management team was installed last May to take control of the situation, and annual operating costs have already been reduced to Dh450m, beating the Dh506m that Nomura Securities expected.

Tabreed unquestionably faces a challenging year, but the company has taken the first steps to rebuild its business, and it now boasts a strong partner to help it do so. @Email:[e-mail]