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Tecom’s profit up 28% in 2022 as revenue hits 22-year high

WAM
Tecom remains committed to distributing a total dividend of AED800m per annum in the first three years of being a listed company

Tecom Group reported a record 28 percent year-on-year (YoY) increase in net profit to AED725.62 million ($197.56 million) for 2022, as revenue rose 12 percent YoY to AED1.97 billion, the highest in 22 years.

The results showed strong demand for the group’s commercial and industrial properties, supported by Dubai’s strong macroeconomic environment and buoyant business and consumer confidence, the UAE state-owned WAM news agency reported.

Malek Al Malek, chairman of Tecom Group, said: “As per our declared dividend policy, we have distributed AED200 million in cash dividends to our shareholders in November 2022.

“Following our exceptional 2022 performance, the board of directors has recommended an interim dividend payment of AED200 million to be distributed in April 2023, bringing the total dividend to AED400 million for the second half of 2022.”

The company remains committed to distributing a total dividend of AED800 million per annum in the first three years of being a listed company, subject to the board and general assembly’s required approval, he stated.

Abdulla Belhoul, CEO of Tecom Group, said: “The strong growth in our occupancy rates in 2022 indicates a sharp return in demand for quality commercial and industrial real estate assets in Dubai and reflects the attractiveness of the group’s specialist real estate offerings.

“I am encouraged by the progress we have made this past year, particularly in increasing the value of our investment property portfolio by nearly 10 percent, as well as increasing and enhancing our high-quality customer base to reach more than 9,500 including companies and freelancers, which represents a 22 percent YoY growth.”

As of December 31, 2022, the occupancy level for commercial and industrial assets was 86 percent, registering the fourth quarter of sequential growth and a substantial increase from the year-end 2021 occupancy level of 78 percent, WAM reported.

Over the year, more than 1,700 new customers joined the business districts catering to six strategic sectors – technology, media, education, science, design and industry – with high demand for both “built-to-suit” and “built-to-lease” properties.

Earnings before interest, taxes, depreciation and amortization (Ebitda) increased by 15 percent YoY to AED1.35 billion and the Ebitda margin expanded to 68 percent in 2022, compared to 66 percent in 2021.

Net profit grew by a record 28 percent YoY to AED725.62 million, in line with the top-line positive performance, which was also supported by the resilience of the economic environment in Dubai and the upward trend in its real estate market.

Funds from operations stood at AED1.20 billion, representing a 19 percent YoY increase, a testament to enhanced operational efficiency across all income-generating assets.

At the end of 2022, Tecom maintained a highly controlled cost of debt and healthy debt profile with a loan-to-value ratio of 14.5 percent and net debt of AED3.08 billion.

The group provides real estate solutions across three main segments: commercial leasing, industrial leasing and land leasing.

The commercial segment revenue increased by 17 percent YoY to AED1.06 billion, driven by a sustained increase in occupancy rates to 85 percent and strong above-target retention rates across all clusters of 92 percent.

Dubai’s expansionary economy and strong demand from manufacturing customers drove higher occupancy and retention rates for both the commercial and industrial leasing segments.

Land leasing continues to enjoy the same level of Ebitda margin at 84 percent, while revenue marginally decreased by 2.7 percent in 2022. However, the group maintained a high retention rate of over 95 percent, expecting this segment to grow further over the coming years in line with Dubai’s economy.

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