Earnings call transcript: Emirates Central Cooling Q3 2025 shows steady growth

Emirates Central Cooling Systems Corp (EMPOWER) reported its Q3 2025 earnings, showcasing a revenue of AED 1.133 billion, marking a 3% year-over-year increase. The company also achieved a net profit before tax of AED 315 million, an 8.1% rise from the previous year. Despite a stable stock price at AED 1.61, EMPOWER’s performance reflects its strong position in the district cooling sector.

Key Takeaways

• Q3 revenue increased by 3% year-over-year to AED 1.133 billion.
• Net profit before tax rose by 8.1% to AED 315 million.
• EBITDA improved by 4.5% to AED 450 million.
• EMPOWER added significant new capacity and secured major projects.
• The UAE economy is forecasted to grow, supporting future opportunities.

Company Performance

Emirates Central Cooling Systems Corp has demonstrated consistent growth in Q3 2025, driven by strategic expansions and project acquisitions. The company’s connected capacity increased with the addition of 24,000 refrigeration tons, and it secured two significant projects: Yas Island and BMCC Uptown Dubai. With the UAE’s economy projected to grow, EMPOWER is well-positioned to capitalize on these favorable conditions.

Financial Highlights

• Revenue: AED 1.133 billion, up 3% year-over-year.
• Nine-month revenue: AED 2.586 billion, a 5.5% increase.
• Net profit before tax: AED 315 million, an 8.1% rise.
• EBITDA: AED 450 million, up 4.5%.
• Net debt maintained at AED 3.17 billion, 2x EBITDA.

Outlook & Guidance

EMPOWER maintains a positive outlook, with a commitment to annual dividends of AED 875 million for 2025-2026. The company projects an EBITDA margin of 46% in 2025, potentially rising to 47% in 2026. Capital expenditures are expected to reach AED 5,500-6,000 million by the end of 2025, with a focus on sustainable growth and energy efficiency.

Executive Commentary

Ramesh Ramudurai, CFO, emphasized the importance of district cooling in energy savings, stating, "District cooling is playing a vital role in this transition, delivering up to 50% energy savings." He also highlighted the company’s strategic alignment with UAE’s economic growth, saying, "Our strategy remains closely aligned with the macroeconomic growth momentum of the UAE."

Risks and Challenges

• Potential fluctuations in humidity affecting consumption revenue.
• Challenges in increasing TSE water availability.
• Macroeconomic pressures from changing base rates and inflation.
• Competition in the district cooling sector.
• Managing large-scale project implementations and capacity expansions.

Q&A

During the earnings call, analysts inquired about EMPOWER’s capacity growth potential and the impact of humidity on revenue. The company addressed these concerns by explaining its strategies for overcoming TSE water availability challenges and leveraging interest rate benefits to support future growth.

Full transcript - Emirates Central Cooling Systems Corp (EMPOWER) Q3 2025:

Moderator/Operator: Welcome to the Empower Q3 2025 earnings call. Following the formal presentation, there will be a question-and-answer session. During Q&A, participants will be able to ask both text and live audio questions. To ask a text question, select the messaging icon, type your question in the box towards the top of the screen, and press the send button. To ask a live audio question, press the request to speak button at the top of the broadcast window. The broadcast will be replaced by an audio questions interface. Press join queue, and if prompted, select allow in the pop-up to grant access to your microphone. You will then be placed in the queue where you will be able to listen to meeting proceedings while you wait for your turn to speak. I will introduce each caller by name and ask you to go ahead.

You will then hear a beep indicating that your microphone is live. Thank you. I will now hand over to Chanda for the formal presentation.

Chanda Tegshintani, Director of Finance, Empower: Good afternoon, everyone, and thank you for joining our earnings call. Today, we’ll review Empower’s financial and operational performance for Q3 2025. I am Chanda Tegshintani, Director of Finance, and it’s a pleasure to have you with us.

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Joining me today are Mr. Ramesh Ramudurai, our Chief Financial Officer, and Mr. Edgar Qureshi, our Chief Commercial Officer. Together, we’ll highlight the key points from this quarter, share the outlook, and take Q&A towards the end of the session.

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Before we begin, I would like to remind everyone that some statements made today may be forward-looking. These reflect our current expectations and are subject to risk and uncertainties, as outlined in this slide. The presentation materials and related financial information are available on our website. In today’s discussion, we’ll cover three main areas. First, a review of our financial results, second, an update on our operations and business outlook, and finally, a Q&A session. With that, I’ll hand it over to our CFO, Mr. Ramesh.

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Ramesh Ramudurai, Chief Financial Officer, Empower: Good afternoon, and thank you, Chanda. I’m Ramesh Ramudurai. Let me start with the key highlights of our performance. Financial results, and the drivers behind our continued growth and operational excellence. Our performance this quarter highlights the resilience and ambition that continue to drive our growth. These are the same qualities that drive the UAE’s transformation into a global economic hub. As urban development accelerates, sustainability and energy efficiency are increasingly taking center stage. The shift toward greener, smarter cities is reshaping urban life, and district cooling is playing a vital role in this transition, delivering up to 50% energy savings compared to conventional cooling systems. Against this backdrop, Empower continues to strengthen its leadership in district cooling. We operate the world’s largest portfolio, backed by more than two decades of proven expertise and the trust of over 152,000 customers. Our long-term master concession agreements across key developments.

Provide a resilient and visible growth pipeline of more than 3.1 million refrigeration tons. As of Q3 2025, we have achieved 1.92 million refrigeration tons in contracted capacity, with 1.628 million refrigeration tons already connected, demonstrating steady expansion and sustained demand. What truly differentiates us is our ability to scale efficiently within these long-term frameworks, ensuring predictable sustainable growth with strong visibility. With robust cash generation, an attractive dividend outlook, and an experienced leadership team, Empower is well positioned to continue delivering long-term value to shareholders while advancing Dubai’s vision of a low-carbon, energy-efficient future.

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Chanda Tegshintani, Director of Finance, Empower: The first nine months of 2025 reaffirmed the resilience of our business fundamentals and our ability to deliver consistent, reliable growth. The year began on a softer note in Q1, largely due to unusually mild temperatures in January. However, demand rebounded sharply in Q2, as hotter-than-normal weather in April drove higher consumption. Financially, performance in the third quarter remained strong. Revenue rose to AED 1.133 billion, up 3% compared to Q3 2024. Net profit before tax reached AED 315 million, an 8.1% increase year-on-year. For the first nine months, revenue stood at AED 2.59 billion, up 5.5%, with profit before tax of AED 757 million, a 5.3% rise. Net debt remained healthy at two times EBITDA, reflecting our strong financial discipline and cash flow management. These results highlight our ability to expand our market presence, maintain operational excellence, and deliver sustainable financial performance while continuing to support.

The UAE’s broader transition toward greater energy efficiency and environmental stewardship. With that, I will hand over to Mr. Edgar, who will share his insights on the macroeconomic landscape across the UAE and Dubai.

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Edgar Qureshi, Chief Commercial Officer, Empower: Good afternoon. I’m Edgar Qureshi, the Chief Commercial Officer at Empower. Foreign investor confidence in the UAE remained strong in Q3 2025. Net inflows reached approximately $615 million at the Dubai Financial Market and $799 million at the Abu Dhabi Securities Exchange. This continued international participation reflects trust in the UAE’s economic fundamentals and signals ongoing momentum in key sectors like infrastructure and real estate. These inflows not only support liquidity in our markets but also reinforce the UAE’s position as a stable, high-potential investment destination. Strong foreign demand underscores that our markets are resilient, dynamic, and attractive for both domestic and global investors. The Central Bank of the UAE anticipates the economy to grow by 4.9% in 2025 and accelerate to 5.3% in 2026, driven by robust expansion in both the hydrocarbon sector, which is expected to grow by 5.

8%, as well as the non-hydrocarbon sector, which is projected to grow at 4.5%. On inflation, the Central Bank of the UAE has revised its forecast for 2025 downward by 40 basis points, now projecting inflation at 1.5%. This moderation provides greater cost visibility for capital-intensive sectors, including district cooling, construction, and manufacturing, helping businesses better plan and manage their expenditures. The UAE continues to benefit from a favorable interest rate environment. The Central Bank of the UAE reduced its base rate to 4.15% in September 2025. Further, to 3.9% in October 2025. This reduction eases financing conditions across the economy, particularly for capital-intensive sectors such as energy and infrastructure. Lower borrowing costs enhance project viability, support new investments, and provide businesses with greater flexibility in managing their capital expenditure plans.

In effect, these measures reinforce the UAE’s pro-growth monetary stance, helping to sustain momentum in key strategic sectors and underpinning overall economic resilience. As always, tourism remains a cornerstone of the UAE’s economic growth. In Q3 2025, we witnessed record visitor arrivals, coupled with consistently high hotel occupancy rates. This sustained inflow of tourists is driving strong demand across multiple sectors, particularly in hospitality, retail, and mixed-use developments, including cooling services. The robust activity in these areas not only supports business performance but also reinforces the broader economic ecosystem, fueling continued investment and development. In short, tourism continues to be a key engine of growth, creating opportunities across the UAE’s service, real estate, and infrastructure sectors, and highlighting the country’s position as a global destination of choice.

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Now, let’s dive into the Dubai-specific economic trends. Dubai International Airport, or DXB, has been recognized as the world’s fifth most connected hub for low-cost carriers and remains the leading airport in the Middle East, according to the latest OAG Megahubs 2025 report. Looking ahead, DXB is on track to surpass the remarkable milestone of 100 million passengers within the next 18 months, underscoring Dubai’s position as a truly global aviation travel hub. Dubai’s residential real estate market continued its strong performance in Q3 2025, recording over 56,000 transactions valued at AED 139.8 billion, both up 16% year-on-year. This marks the second consecutive quarter of record-breaking transaction volumes. The sector’s ongoing momentum is driving sustained demand for energy-efficient district cooling solutions across residential communities, reinforcing the link between real estate growth and strategic infrastructure development.

The Dubai Land Department has launched the first phase of its digital sales service on the DubaiNow platform, enabling the fully digital property sale transactions. For investors, this translates into faster transaction turnaround, streamlined administrative processes, and enhanced confidence in the governance and infrastructure of Dubai’s real estate market. Dubai welcomed nearly 14 million overnight visitors from January to September 2025, up 5% year-on-year. This continued growth highlights Dubai’s strong position as a top global tourism destination and a key driver of economic activity across the city. Dubai’s population crossed over 4 million the first time as inflow of new residents continued. As per Dubai 2040 Urban Master Plan, the Emirates’ residential population is forecasted to reach 5.8 million, translating at a CAGR of 2.7% approximately. Now, I’d like to hand it over to Chanda, who will provide insights on the financial performance for Q3 2025.

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Chanda Tegshintani, Director of Finance, Empower: Let us take a closer look at our financial results for the third quarter and first nine months of 2025 compared to last year. For Q3 2025, revenue reached AED 1.133 billion, representing a 3% increase over 2024. For the nine-month period, total revenue was AED 2.586 billion, a 5.5% year-on-year growth. This growth was driven by the addition of 24,000 refrigeration tons of new capacity added during the quarter. EBITDA for Q3 rose 4.5% to AED 450 million, while the nine-month EBITDA reached AED 1.169 billion, up 4% year-on-year. Net profit before tax was AED 315 million, and profit after tax stood at AED 287 million, reflecting an 8.1% increase over the same quarter last year. For the nine-month period, both pre and post-tax profits grew by about 5.3%.

Which includes a one-off charge of roughly AED 4 million linked to write-off of fees for the term loan financing. With the positive market environment and rising demand, we remain confident in our strategy of sustainable growth through capacity expansion, improved efficiency, and disciplined cost management.

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Now, let us look at some key operational and financial indicators for Q3 and first nine months of 2025. As you know, our business is seasonal. Consumption usually peaks in the summer and slows during the cooler months. This naturally affects both our revenue mix and EBITDA margins. Because of this, consumption revenue as a percentage of total revenue is an important metric to take a note of. For Q3 2025, this ratio was 65.2%, and for the nine-month period, it was 58.4%. These figures show the expected seasonal trend in our operations and continue to support a healthy margin profile. I’ll now hand over to Mr. Ramesh, who will share more on our leverage position and dividend policy.

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Ramesh Ramudurai, Chief Financial Officer, Empower: Thank you, Chanda. Let me continue with an update on our debt position, which reflects our disciplined and balanced approach to growth. As of the first nine months of 2025, net debt stood at AED 3.17 billion, with net debt to EBITDA steady at two times, underscoring our commitment to maintaining a resilient and flexible capital structure, with a target leverage range of three to four times. We continue to retain ample headroom to support future growth opportunities. In line with this strategy, we successfully refinanced our term loan facilities in Q1 2025, transitioning to a new AED 5.5 billion revolving credit facility. This move has significantly strengthened our financing profile, extending maturities to February 2028 and reducing financing costs compared to our previous structure. These savings are already reflected in our financial results, and our debt portfolio is now supported by a cost-efficient facility with longer maturities.

Reinforcing our liquidity position. Ensuring that we are well positioned to pursue future opportunities with confidence.

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Moving on to dividends, our policy continues to reflect our commitment to delivering consistent and meaningful value to shareholders. As the chart shows, we have maintained a strong record of dividend distributions. Following our IPO, we paid AED 850 million annually in both 2023 and 2024, with payout ratios of 87% and 91% respectively, demonstrating strong cash flow generation and disciplined capital allocation. Building on this track record, shareholders have approved a new progressive dividend framework. Under this plan, we are committed to paying AED 875 million annually in 2025 and 2026, a clear sign of our confidence in Empower’s performance and outlook and our continued focus on delivering value to shareholders. The final dividend for 2024, totaling AED 437.5 million, was distributed in April 2025. The steady and growing dividend profile underscores both our financial strength and our commitment to rewarding long-term investor trust.

Most recently, in October 2025, we paid an interim dividend of AED 437.5 million, further reinforcing our commitment to our shareholders and our continued ability to deliver strong, reliable returns.

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Next, I would like to share an update on our capacity outlook and guidance, which continue to demonstrate a solid platform for sustained long-term growth. Back in 2017, we had connected capacity of 992,000 refrigeration tons, which increased steadily to 1.4 million refrigeration tons by 2022, supported by a healthy 7.2% CAGR. Growth has remained consistent since then, reaching 1.566 million refrigeration tons by the end of 2024 and 1.628 million refrigeration tons by the end of September 2025. Looking ahead, we project connected capacity to reach between 1.73-1.75 million refrigeration tons by 2026, and addition of 97,000-122,000 refrigeration tons over the remainder of 2025 and into 2026. The steady growth reflects both rising customer demand and our strong execution across long-term concession agreements.

In addition, we have secured two new projects that further strengthen our capacity pipeline and reinforce our long-term growth outlook. One, Yas Island project with a capacity of 23,853 refrigeration tons. Two, BMCC Uptown Dubai project with a capacity of 24,675 refrigeration tons. These strategic wins deepened our market presence and enhanced visibility into future expansion opportunities.

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Thank you once again for your time and engagement. Let me take a moment to recap our investment proposition. The key strengths that continue to drive our success. We have built a strong track record of growth and market leadership, supported by a resilient business model that delivers predictable and robust cash flows. Our strategy remains closely aligned with the macroeconomic growth momentum of the UAE and Dubai, allowing us to benefit from emerging opportunities across high-growth developments. Our commitment to shareholders is reflected in both our sustainable dividend profile and our strategic role as a key enabler of the UAE’s Net Zero 2050 mission. By maintaining financial discipline, pursuing sustainable expansion, and focusing on long-term value creation, we continue to offer a compelling investment opportunity. I will hand over to Chanda for the Q&A session and concluding remarks.

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Chanda Tegshintani, Director of Finance, Empower: Before we open the floor for Q&A, please note that an appendix has been included in the presentation for your reference. It provides detailed information on our P&L, balance sheet, and cash flow statement, along with explanatory notes. We have also included sections on share price performance, analyst coverage, as well as ESG initiatives, giving you a full view of our financial position and sustainability progress. Thank you for your time and attention. We’ll now begin the Q&A session.

Moderator/Operator: We will now proceed with the Q&A session. Just a reminder that participants can ask both text questions and live audio questions. To ask a text-based question, please select the messaging icon, type your question in the box towards the top of the screen, and press the send button. If you wish to ask a live audio question, press the request to speak button at the top of the broadcast window. This will be replaced by the audio questions interface. Press join queue, and if prompted, select allow in the pop-up to grant access to your microphone. You will then be placed in the queue where you will be able to listen to the meeting proceedings while you wait for your turn to speak. I will introduce each caller and ask you to go ahead, after which you will hear a beep indicating that your microphone is live.

You’re still waiting for questions to be submitted? I will allow a few more minutes. We have our first audio question. Please wait for the beep and then proceed with your question. Thank you. While we wait for our audio question, a reminder to please submit your text-based questions as soon as you have a moment. Thank you. I see we have our first text question. I will pass it back to the room for an answer.

Ramesh Ramudurai, Chief Financial Officer, Empower: Yes, your observation is right. Our contracted capacity is growing at a robust rate, and that should reflect in terms of what we are expected to collect in the next six, five quarters. In fact, you can also observe that this year in 2025, we have already added 62,000 in the first three quarters. With the third quarter capacity addition at 24,000, and we expect to have a similar quarterly growth for 2025, the last quarter. Our guidance for next year is between 97,000-122,000 tons. That should, yes, enhance the connected capacity for the last quarter and for the next year. The 40% CapEx growth is an indication of faster growth in 2026 because we are creating assets to deliver services to connections that are expected in 2026.

Moderator/Operator: Thank you. Let’s give it a few more minutes for additional questions. Another question back to you to respond. Thank you.

Ramesh Ramudurai, Chief Financial Officer, Empower: Yes, our guidance for EBITDA margin for 2025 is going to be 46%. It can grow to 47% in 2026, subject to we reaching a target for TSE availability, hopefully by end of fourth quarter 2025 or by first quarter 2026, which should boost our EBITDA margin to a 47% level for 2026.

Moderator/Operator: Another question.

Ramesh Ramudurai, Chief Financial Officer, Empower: Yeah, I answered that. EBITDA margin is going to be around 46% for 2025 and expected to be at around 47% in 2026. The disruption, or I would call it as resumption of availability of TSE, is still a challenge. Of course, our operational team is in touch with the Dubai Municipality team, and we are trying to accelerate the availability of TSE in our platforms, which should boost margin for 2026.

Moderator/Operator: We have an audio question. Please proceed after you hear the beep.

Ramesh Ramudurai, Chief Financial Officer, Empower: For CapEx, our original guidance stays. It is going to be around AED 5,500 million-AED 6,000 million. That is what we expect by end of 2025. When we are talking about potential upside, we are referring to acceleration of the connections that are scheduled for 2025, last quarter and 2026. There is a lot of activity on the real estate side. Builders are accelerating their own construction activity. The connections could happen sooner than what we originally anticipated. That should actually give that upside potential, which means we can even move beyond the range of 97,000-122,000 tons if some of those connections actually happen earlier than anticipated. We are looking at an opportunity to acquire any business that is potentially available. It is an ongoing process. We would not be able to share any specific information at this point in time.

Moderator/Operator: Let’s give it a few more minutes for any additional questions.

Ramesh Ramudurai, Chief Financial Officer, Empower: Regarding the TSE availability, we are still in the range of 8-10%. If you recall, we actually reached a level of 15% of our requirement went through TSE. That dropped to 8% when the disruption happened in April 2024. We are slowly plowing back. We are around 10%. Our expectation is that we should reach the full 15% level, which was the original level before April 2024, by first quarter 2026. As we highlighted in our last call, we are building capacity to process TSE in our plant rooms, and we are definitely adding capacity out from our side on the expectation that Dubai Municipality will be able to make additional TSE water available to our plant rooms. We will be there to take advantage of it once Dubai Municipality increases its capacity.

Moderator/Operator: We have received an audio question. Once you hear the beep, please proceed.

Ramesh Ramudurai, Chief Financial Officer, Empower: On the interest rate, you could actually do your calculations. If you see, for the first nine months of this year, we have already had a benefit of close to AED 17 million, and you can extrapolate it for the full year. Assuming that there is going to be another quarter percentage point reduction in the December meeting, that should give you enough input for you to calculate potential interest cost for 2026 and beyond.

Moderator/Operator: If we still have our audio caller online, please proceed with the question once you hear the beep.

Ramesh Ramudurai, Chief Financial Officer, Empower: On the update on the pass-through, there is a meeting scheduled in November. We expect that our matter is expected to be taken up in that meeting, and we should get a resolution before year-end.

Moderator/Operator: We have an audio question from Eldar. Please proceed with your question. Thank you.

Chanda Tegshintani, Director of Finance, Empower: Yes, hi. Thank you. Can I ask you about the consumption revenue growth? It seems like the consumption itself was not growing that much in 3Q, and revenue was also slightly down after very, very strong 2Q, though. Why is that happening? I think 3Q was kind of a normal quarter in terms of temperatures. Is my observation correct and what is driving this? Thank you.

Ramesh Ramudurai, Chief Financial Officer, Empower: Yeah, I think we do have an issue on the consumption side. First, I think we had the first issue in the first quarter when weather was unusually cold. That had an impact on the consumption revenue. In the third quarter, the reason is, though there is a heat, the humidity was actually lower than what it was in 2024, which actually caused an issue. In fact, the relative humidity in 2024 was at around 50%-52% in 2024 for July and August, which actually dropped down to 44%-42% in 2025. Though you had a heat level, which is probably very similar to what it was in 2024, the humidity levels are substantially lower. As you are aware, air conditioning requirement actually grows when there is a higher humidity. Hopefully, these are all due to climate change. Maybe a cooler third quarter, fourth quarter.

May not happen, and it might actually have a higher humidity in the last quarter. Hopefully, that should balance potentially by end of the year our consumption revenue.

Moderator/Operator: Let’s allow a few more minutes for some additional questions.

Chanda Tegshintani, Director of Finance, Empower: I think there are no further questions. This concludes our call for today. We truly appreciate your participation and your continued interest in the company. If you have any further queries or need more information, please reach out to our investor relations team. Thank you once again, and we look forward to speaking with you soon.

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