The Saudi Electricity Company is one of the largest listed companies in the Saudi financial market (Tadawul) and serves as the backbone of the electrical energy sector in the Kingdom. Since its establishment in 2000, the company has played a pivotal role in meeting the increasing demand for electricity across various regions of the Kingdom, serving over twenty million subscribers from individuals and institutions. The company possesses a vast infrastructure of generation plants and transmission and distribution networks, making it a key player in achieving the targets of Saudi Vision 2030, particularly in enhancing energy infrastructure and introducing renewable energy sources. In this article, we will provide a detailed overview of the performance of the Saudi Electricity Company in recent times, focusing on its financial results for 2024, explaining the reasons for profit volatility, the impact of ongoing sector reforms, as well as analyzing its competitive position and the most important developments in the electrical sector in the Kingdom. We will also highlight stock indicators in Tadawul and answer the most frequently asked questions by investors and interested parties. Through this analysis, we aim to provide a comprehensive and neutral picture that helps the reader understand the company's position in the market and the dynamics of the Saudi electricity sector, emphasizing the importance of consulting a licensed financial advisor before making any investment decisions.
Overview of the Saudi Electricity Company and Its History
The Saudi Electricity Company was established in 2000 by a cabinet decision, merging two major government projects into one entity to unify the management of the electricity sector and ensure more efficient service provision. The company owns an integrated network of generation, transmission, and distribution stations covering most areas of the Kingdom, serving over 20 million subscribers among individuals and institutions. The Saudi government contributes more than 74% of the company's capital, while individual and institutional investors own the remaining share. Since its inception, the company has played a major role in developing the energy infrastructure in the Kingdom, investing in massive expansion and modernization projects, including the introduction of smart grid technologies and renewable energy. Today, the company is one of the largest listed companies in Tadawul in terms of market capitalization and assets, representing a fundamental pillar of Saudi Vision 2030, which aims to diversify the economy and achieve sustainability in the energy sector.
Ownership Structure and Government Role in the Company
The ownership structure of the Saudi Electricity Company is one of the distinctive factors affecting its performance and strategy. The Saudi government, represented by the Ministry of Finance and the Public Investment Fund, owns more than 74% of the company's capital, giving it a leading role in shaping electricity sector policies and ensuring stability. This government role has reflected on supporting the company during crises, providing it with financial and regulatory capabilities that are not typically available to private companies. On the other hand, the remaining shares are owned by individual and institutional investors, both local and international, giving the company a mixed character between the public and private sectors. This blend in ownership enhances investor confidence and makes the company's performance a focal point for decision-makers in the state and shareholders alike. The company is subject to strict regulatory and disclosure requirements of the Saudi financial market, ensuring a high degree of transparency and accountability.
Financial Performance of the Saudi Electricity Company in 2024
The financial results of the Saudi Electricity Company for 2024 witnessed a notable growth in revenues, reaching 88,666 million Saudi Riyals, an increase of 17.7% compared to 2023. This growth is attributed to an increase in the weighted regulatory return on capital cost and growth in electricity demand across various sectors. Total profit also rose to 17,486 million Riyals, achieving a 12.7% increase from the previous year. However, net profit recorded a significant decrease of 33% to 6,867 million Riyals, compared to 10,249 million Riyals in 2023. This decline is mainly attributed to the recording of non-recurring expenses related to fuel price adjustments and energy handling costs, as part of the ongoing restructuring of the electricity sector. Excluding these exceptional items, the actual operating net profit was high, with the company indicating that the profit would have reached 12,081 million Riyals, an increase of approximately 8.9% from the previous year. These results reflect the company's resilience in facing regulatory and financial challenges and its ability to achieve sustainable operational growth despite exceptional circumstances.
Stock Indicators in Tadawul: Price, Market Capitalization, and Returns
The stock of the Saudi Electricity Company is listed on the Saudi financial market (Tadawul) under the symbol "5010". During 2024, the stock price fluctuated due to profit volatility, trading in the range of 13-14 Riyals before the results announcement, and then experiencing some temporary downward pressure after the announcement of negative net profit. Based on the number of issued shares (approximately 4.5 billion shares), the company's market capitalization ranges between 70 and 80 billion Riyals, making it one of the largest companies listed in the Saudi market. As for the price-to-earnings (P/E) ratio, it became negative in 2024 due to the company recording a negative net profit, while the ratio traditionally ranged around 15-25 times in previous years that saw positive profitability. The company has a history of distributing attractive cash dividends, typically ranging between 8-12% of the nominal value of the share, making it a preferred choice for investors seeking stable returns. However, it is important to note that government policies and regulatory changes may significantly impact the stock's performance and its distributions in the future.
Dividend Distribution Details and Medium-Term Return Policy
The Saudi Electricity Company has a strong record of distributing dividends to shareholders, as management has traditionally recommended high cash distributions reflecting stable cash flows and a strong financial position. For example, the board of directors recommended a substantial cash dividend for 2024, comparable to previous years, despite the temporary impact of non-recurring expenses on net profit. Dividend yields typically range between 8% and 12% of the nominal value of the share. The company's ability to continue this policy depends on several factors, including operational revenue growth, government support, and accumulated profit reserves. In an environment characterized by the state's commitment to the stability of the electricity sector, the company's dividend distribution policy is among the most competitive in the Saudi market. However, it is always advisable to review official announcements and general assembly recommendations to verify actual distribution figures, especially with potential changes in financial and regulatory policies.
Regulatory Factors and Their Impact on Company Results
The regulatory framework plays a pivotal role in determining the profitability and margins of the Saudi Electricity Company. Electricity prices and tariffs are set by the Electricity and Co-Generation Regulatory Authority, taking into account production costs and the allowed regulatory return. In recent years, the company has seen an increase in the weighted regulatory return on capital cost, which positively reflected on its revenues. On the other hand, regulatory reforms impose challenges, such as settling historical fuel price discrepancies, which led to the recording of non-recurring expenses that affected profitability in 2024. Major reforms are currently being implemented, including restructuring the sector and encouraging private sector participation, which may lead to changes in the company's role in the future. The company's flexibility in responding to regulatory changes and its ability to adapt to new policies remain essential factors for continued growth and achieving attractive returns for shareholders.
Analysis of the Saudi Electricity Sector and the Company's Role in the Market
The electricity sector in the Kingdom operates as a quasi-monopoly, with the Saudi Electricity Company being the primary provider of electricity generation, transmission, and distribution services across the Kingdom. However, the government has begun encouraging the entry of independent power producers (IPPs) and developing renewable energy projects to enhance sector efficiency and diversify production sources. The company faces indirect competition from these projects, as well as from regional water and electricity companies and major petrochemical companies that produce part of their electricity needs. Nevertheless, the company maintains a clear dominance in the distribution and network sector and remains the focal point for energy transmission operations in the Kingdom. The main challenges facing the sector include fuel price fluctuations, the need to upgrade networks, and the requirements for transitioning to clean energy, which drive the company to continuously invest in technology and infrastructure.
Competition in the Electricity Sector: Independent Production and Renewable Energy
With the ongoing transformations in the Saudi energy sector, independent companies (IPPs) have entered the electricity generation field through partnerships with the private sector and the government. These companies produce about 20-30% of the total electricity in the Kingdom and sell their output under long-term contracts to the Saudi Electricity Company. Additionally, the Kingdom is witnessing significant expansion in solar and wind energy projects as part of the Vision 2030 strategy, providing new alternatives to traditional energy. Although these projects do not directly compete with the Saudi Electricity Company in distribution, they affect demand dynamics and push the company to adopt innovative solutions to enhance its efficiency and competitiveness. The entry of major industrial companies like Aramco and SABIC into energy production for self-use or surplus sales reflects a shift in the competitive landscape within the sector.
Key Developments and Recent Projects of the Company
In recent years, the Saudi Electricity Company has witnessed several strategic developments, most notably signing major agreements for power purchase and expanding generation stations, such as the expansion of Rabigh 1 station with a capacity of 900 megawatts at a cost of 5.33 billion Riyals. The company also completed the issuance of international sukuk worth approximately 2.4 billion dollars to finance its capital projects and support its future expansions. The company is currently focused on upgrading its networks to integrated smart grids and developing solar and wind energy projects in collaboration with the private sector. It is also exploring opportunities to export surplus electricity to neighboring countries and participating in regional forums to enhance electrical integration. These developments confirm the company's commitment to meeting increasing demand and achieving operational and financial sustainability in the long term.
Impact of Sector Restructuring and Challenges Ahead
The Saudi Electricity Company is currently undergoing a wave of sector reforms aimed at increasing the efficiency of the electricity market and encouraging competition and private sector participation. These reforms have resulted in the recording of non-recurring expenses in 2024 due to the settlement of fuel discrepancies and energy handling costs, but management has confirmed that these items are exceptional and will not recur in the future. In the long term, restructuring is expected to contribute to improving operational processes and reducing waste, with the potential to enhance profitability after the financial settlement phase is completed. However, the company is still required to continue investing in infrastructure and modern technologies to keep pace with the demands of digital transformation and clean energy, while maintaining a balance between shareholder and state interests.
Company Financing and Future Investments
The Saudi Electricity Company has strong financing capabilities, supported by government backing and a strong financial position. The company issued international sukuk worth 2.4 billion dollars in early 2026, reflecting international investors' confidence in the company, and it benefits from extensive credit lines with local and global financial institutions. The company's future investments focus on developing new plants with combined cycle technologies, expanding high-voltage transmission networks, and investing in renewable energy projects and smart grids. Its plans also include expanding smart city projects and green hydrogen, in line with the requirements of Vision 2030. These investments aim to meet the increasing demand for electricity and ensure the sustainability of operational and financial growth.
Future of the Electricity Sector in Saudi Arabia and the Company's Central Role
The future of the electricity sector in Saudi Arabia is characterized by a mix of challenges and opportunities. On one hand, demand for energy is increasing with population growth and massive projects like NEOM and the Red Sea, requiring significant infrastructure expansions. On the other hand, the sector is moving towards diversifying energy sources, with an enhanced role for solar, wind, and green hydrogen. The Saudi Electricity Company plays a central role in this transformation by leading expansion projects, upgrading networks, and participating in clean energy initiatives. The company's ability to capitalize on these opportunities depends on its flexibility in adapting to regulatory and technological changes and its continued investment in modern competencies and technologies. Amid these dynamics, the company is expected to remain in a leading position, maintaining its fundamental role in ensuring the security and sustainability of electricity supplies in the Kingdom.
Comparison with Sector Companies and Major Competitors
Despite the Saudi Electricity Company's dominance in the distribution and transmission sector, the market is witnessing a growing role of independent power producers (IPPs) and renewable energy companies. These entities are enhancing sector efficiency and providing alternatives to traditional energy, prompting the company to adopt innovative solutions and increase its focus on sustainability. Among local competitors, National Water Company, Marafiq, and some major petrochemical companies that produce part of their electricity needs stand out. Regionally, the company competes with its counterparts in Gulf countries in electricity interconnection projects and regional integration. The Saudi Electricity Company remains the largest in terms of assets and customer base, with high financial and regulatory capabilities supporting its distinction in the market.
Role of Renewable Energy and Innovation in the Company's Strategy
The Saudi Electricity Company places great importance on renewable energy and technological innovation in line with the goals of Vision 2030 for a sustainable economy. The company has participated in developing major solar and wind energy projects and seeks to integrate these sources into the national energy mix. It is also investing in upgrading networks to smart systems and developing remote control systems such as SCADA and national control centers. The company's future plans include exploring solutions for green hydrogen, participating in smart city initiatives, and providing consulting services to neighboring countries in network modernization. Innovation is expected to continue playing a role in enhancing the company's competitiveness and achieving its strategic goals in the long term.
Conclusion
In conclusion of this comprehensive analysis, it is clear that the Saudi Electricity Company continues its pivotal performance in the Saudi energy sector, benefiting from strong government support and an investment strategy focused on expansion and modernization. Despite regulatory challenges and the recording of non-recurring expenses that temporarily affected net profit in 2024, the company has shown a high ability to achieve sustainable operational growth and competitive dividend distributions. With the market's shift towards renewable energy and digital transformation, the company remains in a leading position, reinforcing its status through expansion and innovation projects. It is important to emphasize that investing in shares of major companies like the Saudi Electricity Company is influenced by several factors, including government policies, regulatory changes, and sector dynamics. Therefore, it is always advisable to consult reliable information sources and stay updated on the latest developments, and not hesitate to consult a licensed financial advisor before making any investment decisions. The SIGMIX platform provides you with the necessary analyses and data to follow the latest developments in the Saudi stock market and better understand the performance of listed companies.
Frequently Asked Questions
The Saudi Electricity Company achieved notable revenue growth in 2024 due to three main factors: First, an increase in the weighted regulatory return on capital cost approved by regulatory authorities, allowing for higher returns on investments in electrical assets. Second, the Kingdom experienced growth in electricity demand from various sectors, especially with urban and industrial expansion. Third, the company's revenues increased from the development of transmission and generation stations for new customers, benefiting from the expansion of new city projects and renewable energy.
The company recorded non-recurring expenses in 2024 due to the settlement of historical discrepancies in fuel prices and quantities and energy handling costs, as part of the restructuring of the Saudi electricity sector. These exceptional expenses led to a 33% decrease in net profit compared to the previous year, despite achieving positive growth in revenues and operating profits. Without these temporary items, the operating net profit would have shown growth of approximately 8.9%.
The Saudi Electricity Company has a strong record of distributing high cash dividends, often within the range of 8-12% of the nominal value of the share. The distribution policy depends on operational results and accumulated profit reserves, along with government support for the sector. Despite the temporary decline in net profit in 2024 due to non-recurring expenses, the board of directors recommended attractive dividends. This policy is expected to continue as long as operational revenues remain strong and government support is in place.
Electricity sector reforms aim to increase efficiency, encourage competition, and stimulate private sector participation in generation and transmission. These reforms mean that the company may face greater competition and the need to improve operations in the long term. In the short term, the reforms led to the recording of non-recurring expenses that affected profitability in 2024. However, restructuring is expected to enhance operational efficiency and improve profitability after the financial settlement phase is completed.
The Saudi Electricity Company is heavily investing in renewable energy projects, such as solar and wind energy, in line with Vision 2030. It is also working on upgrading networks to smart systems to efficiently integrate renewable energy sources. This approach helps the company keep pace with changes in the sector, reduce reliance on traditional fuels, and enhance the sustainability of its operations in the future.
Despite the Saudi Electricity Company's dominance in the distribution sector, there is competition in generation from independent power producers (IPPs) and renewable energy projects. There are also regional companies like Marafiq and the National Water Company, as well as major industrial companies that produce part of their electricity needs. Nevertheless, the Saudi Electricity Company remains the largest in terms of assets and customer base.
The issuance of international sukuk worth 2.4 billion dollars represents a strategic step to support the company's expansion plans, finance new infrastructure projects, and ensure liquidity for future investments. This issuance reflects international investors' confidence in the company and the strength of its financial position, providing it with diverse funding sources away from complete reliance on government financing.
Electricity prices in the Kingdom are subject to regulatory authority decisions, taking into account production costs and the allowed return on assets. Any changes in tariffs or government support policies directly impact the company's revenues and profit margins. In recent years, raising the regulatory return has led to increased revenues. Conversely, restructuring support or changes in fuel prices may affect the company's future results.
The Saudi Electricity Company is focusing on expanding gas-fired generation plants using combined cycle technologies, as well as developing high-voltage transmission networks. It is also working on upgrading networks to smart systems and implementing solar and wind energy projects. Future plans include smart city projects, green hydrogen, and providing consulting services to neighboring countries in the field of electrical networks.
The stock of the Saudi Electricity Company is characterized by stability and high liquidity, attracting investors seeking attractive dividends. However, the stock's performance is influenced by several factors, including government policies, regulatory changes, and economic conditions. Therefore, it is essential to analyze all influencing factors and regularly review financial data, as well as consult a licensed financial advisor before making any investment decisions.