Commodities rise a boost for Taqa

Rising commodity prices helped Abu Dhabi National Energy Company report a fivefold increase in profits yesterday.

Investors piled into the stock of the company that is also known as Taqa, pushing up the share price by almost 3 per cent.

Taqa reported net profit for last year of Dh937 million (US$255.1m), up from Dh182m in 2009. Revenue rose 27 per cent last year from 2009 to Dh21.35 billion.

That sent the stock up 2.9 per cent on the Abu Dhabi Securities Exchange General Index to close at Dh1.44 a share, its biggest one-day gain in three months.

But the results were described by Taqa as preliminary and unaudited. "We have worked hard to harness efficiency and opportunity within our footprint while simultaneously adding to it with valuable and complementary transactions during 2010," said Abdulla al Nuaimi, the chief executive and managing director of Taqa, which is controlled by the Abu Dhabi Government.

"The net result is a boost to the bottom line."

The full-year results imply Taqa's fourth-quarter net income swung to a Dh261m profit last year from a Dh281m loss in the comparable 2009 period, while revenue increased 41 per cent to Dh6.23bn.

Mr al Nuaimi attributed the turnaround partly to a "more positive commodity pricing environment" in the second half of last year.

"Combined with our rapid and tightly priced completion of necessary refinancing during 2010, we have started 2011 with confidence and conviction," he said.

Mr al Nuaimi became Taqa's chief executive last April, six months after the departure of the company's previous chief executive, Peter Barker-Homek, who has since sued Taqa in the US federal court, alleging wrongful dismissal. The case is still before the court.

While at Taqa, Mr Barker-Homek orchestrated a three-year spree in which the company spent about $25bn assembling an international portfolio of oil, gas and power assets spanning four continents.

That saddled Taqa with huge debt, peaking at $17bn just as the global economy was sliding into recession.

Critics questioned whether Taqa's spending on mature oil and gas properties in the North Sea and Canada, as well as stakes in Caribbean power plants, represented prudent use of government funds.

After Mr Barker-Homek's departure, Carl Sheldon, Taqa's general manager, and later Mr al Nuaimi, said the company would focus on "organic growth" and debt reduction.

The debt has been slowly coming down as Taqa took such steps last year by replacing about $4.48bn of revolving credit facilities with about $4bn of new facilities.

But under Mr al Nuaimi's leadership, Taqa's international asset portfolio has continued to expand, reaching a total value of Dh115.55bn by the end of last year.

Taqa's oil and gas acquisitions last year consisted of properties that complemented its existing North Sea and Canadian assets, holding clear potential for cost savings through operational synergies.

Taqa also benefited from transfers of various power, water and aluminium assets from its parent, the Abu Dhabi Water and Electricity Authority, at advantageous financial terms.

Last month, Taqa sold its Caribbean assets back to its joint venture partner Marubeni, saying it planned to focus on developing its power and water business in the "greater Mena" region. The company's electricity assets are mainly in Abu Dhabi, north Africa and India.

tcarlisle@thenational.ae