Nebras Energy Q.P.S.C. (QEWS) Earnings Call Transcript

Hello, and welcome to Nebras Energy Earnings Call. [Operator Instructions] I will now turn the call over to our moderator, Bobby Sarkar. You may begin.

Thank you, operator. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Nebras Energy's Third Quarter and 9 Months 2026 Results Conference Call. So on this call, we have Shahzad Gill, who is the Chief Finance and Planning Officer at Nebras Energy; and we have Dan Sabitov, who is the Corporate Planning, Performance and IR Manager. So we will conduct this conference with management first reviewing the company's results followed by a Q&A session. Please note that we will accept questions in an audio-only format for this webinar. I would now like to turn the call over now to Shahzad. Shahzad, please go ahead.

Thank you very much, Bobby. Good afternoon, everyone. Welcome to Nebras Energy's Q3 2026 Financial Results Presentation. We shall start, as usual, with the headlines, and then we'll go to the details and analysis with prior year. If we can get to Slide 4, please. Nebras Energy Group's operational performance has remained strong throughout the first 9 months of 2026. Business operations remain robust and resilient despite the current macroeconomic and political headwinds. Our plant operations continued without interruption. The company continues to monitor the regional situation closely and is ready to deal with any unusual circumstances. Nebras Energy posted revenue of QAR 2.4 billion for the first 9 months of 2026. This is 5% increase from the same period last year. The group posted an EBITDA of QAR 1.5 billion and net profit of QAR 1 billion. Due to delays in senior debt financial close of Facility E project, the company and rest of the sponsors continue to fund the construction of the project. Nebras Energy Group's gross installed operational power capacity is 20 gigawatts, out of which 4.2 gigawatts is renewables capacity. Gross capacity under construction is 8.7 gigawatts. Gross water capacity is 541 MIGD, while gross capacity under construction for water is 110 MIGD. Currently, there are 6 under construction projects in different parts of the globe. These are combined cycle gas projects. Next slide, please. So on this slide, we list out investment highlights. The fundamentals remain strong. Market share in power is 55% and water 69% within Qatar. Internationally, we have a well-diversified portfolio of renewables and thermal assets across multiple regions where demand growth stays strong, gas plays an important role as transition fuel. And renewables are playing their part in replacing old thermal technology. We have long-term offtake contracts for our projects and corresponding long-term fuel supply agreements are in place. Cost of fuel is recovered through pass-through mechanism built within our long-term power and water purchase agreements. Electricity demand internationally is expected to grow significantly in the coming years. And Nebras Energy as a group is well placed to embrace these opportunities working together with our international partners. We'll move to the next slide, please. Power and water dispatch has been higher compared to the same period last year. Power and water availability is also higher in 2026 compared to the same period last year. We'll get to the next slide. Key financial highlights for first 9 months of 2026. The group posted a revenue of QAR 2.4 billion. This is 5% higher compared to the same period last year. EBITDA for the period is QAR 1.5 billion. This is 1% higher for the corresponding period last year. Net income attributable to equity shareholders for the period is QAR 1 billion. This is also 1% higher compared to the same period. With this, I shall hand over to Dan to go through the variance analysis.

Thank you, Shahzad, and good afternoon, everyone. On Slide 8, revenue increased by 5% year-on-year, largely driven by higher sent out power and water, better availability and higher capacity charge rates under the PWPA. Gross profit increased to QAR 733 million in 2026 compared with QAR 711 million for the same period last year, mainly reflecting higher revenue, partially offset by higher fuel costs. EBITDA amounted to QAR 1,533 million in 2026 compared with QAR 1,516 million for the 9 months of 2025. The increase was mainly driven by higher gross profit and higher contribution from JVs and associates, partially offset by lower other income and minor increase in G&A expenses. Turning to Slide 9. Share of profit from our joint ventures and associates increased by QAR 28 million compared to the prior year. The increase was primarily driven by finance income on service concession asset at Facility E, which is under construction. This is in line with the service concession accounting. Increase is further driven by higher capacity charge rates at Ras Girtas Power Company. For international assets, lower earnings from U.K. Wind were mainly due to a onetime fair value adjustment related to changes in subsidy indexation, lower wind speeds and power prices impacting wind farms in Australia, partially offset by higher income from IPP4 plant in Jordan from finance lease recalculation. Other and interest income decreased from QAR 276 million to QAR 244 million for the 9 months of 2026. The decrease is mainly explained by lower dividends from available-for-sale investments. Net profit was QAR 1,036 million, which is nearly 1% higher compared with the previous year results. Solid operational performance, contributions from JVs and associates and lower income tax expense was offset by higher finance expenses and lower other income as just explained. Key financial highlights for the third quarter are available on Slide 10. Quarter results in more details will be covered in the next 2 slides. Turning to Slide 11. Revenue for the third quarter of 2026 increased by 2% versus Q3 2025. Increase was mainly driven by higher capacity charge rates and higher output revenue. Higher gross profit was primarily from higher revenue, partially offset by higher fuel costs. EBITDA increased by 18% and amounted to QAR 641 million. The increase was largely due to higher gross profit and higher share of profit from JVs and associates, which we will discuss on the next slide. Now moving to Slide 12. Increase in share of profits from JVs and associates, mainly driven by finance income at Facility E, as discussed earlier. Income recorded this quarter includes the catch-up for 2025 and the first half of 2026. For international assets, the increase is largely driven by unfavorable impact from the change in functional currency from Uzbekistani som to euro at Surkhandarya project recorded in Q3 2025. Lower income -- lower other and interest income is mainly attributable to lower dividends from available-for-sale investments. Net profit for the third quarter increased by 25% as compared to Q3 2025, increase is largely driven by strong contribution from JVs and associates, including Facility E income, net FX loss recorded in Q3 2025, partially offset by higher finance expense, lower other income, as just explained and higher income tax expense. Now turning to financial position on Slide 13. Total assets of the group stand at QAR 24.8 billion, with 4% increase comparing to end of 2025, which was mainly due to capital expenditures on Facility E and RAF Peaker projects. Lower cash mainly due to maturity of USD 300 million corporate facility at Nebras Power as well as capital expenditures on 2 projects in Qatar. Decrease in value of available-for-sale investments is driven by the sale of securities and change in the market price of shares, which is recognized in other comprehensive income. Moving to Slide 14. Total equity of the group increased by nearly 5% and amounted to QAR 16.5 billion, increase largely driven by the profit for the period and positive cash flow hedge reserve movements recognized in other OCI. 1% increase in total debt, mainly driven by additional borrowings to support investment program in Qatar, partially offset by maturity of USD 300 million corporate facility at Nebras Power. Increase in net debt versus end of 2025 is mostly due to additional drawdowns to support ongoing strategic investments. With that, we'll open up for questions. Over to you, Mark.

[Operator Instructions] And our first question comes from the line of [indiscernible] with Al Rayan Investment.

This is [indiscernible] from Al Rayan Investment. Congratulations on the good set of results. Just want a little bit more explanation on share of profit from JVs, like why it increased so much? I know like you already mentioned on the slides, but if you could explain it much more, so it would be good.

Bobby, could you moderate the questions, please?

Yes. So my question is about the share of profit from JVs. So there's an increase of 64%. Could you explain it in more detail like why there's an increase?

Shahzad, this is Bobby. Can you hear me?