Profit down 31% at Dubai toll road operator Salik

Wam

• Listed in Dubai last September
• Q2 trips at record level
• AED548m dividend approved

Dubai toll road operator Salik saw its net profit shrink 31 percent in the second quarter, to AED272.6 million ($74.2 million), from AED393.6 million a year earlier. 

The company said the fall was due to it incurring “new costs, such as concession fees, rent, amortisation, transitional service expenses, as well as finance costs”.

These followed its listing as a single entity on the Dubai Financial Market stock exchange last year. 

Salik sold 20 percent of its shares in an initial public offering in September. Since last July, it has operated as a separate legal entity from its original parent, the Dubai Roads and Transport Authority, through a 49-year concession agreement. 

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The company said in a stock market filing on Friday that as a result of this change in operating structure, the financial results reported this week “may not accurately reflect the company’s performance on a like-for-like basis”. 

The Q2 net profit beat analysts’ mean estimate of AED255 million, according to the data compiler Refinitiv.

Salik’s revenue for the quarter was up 12 percent year-on-year to AED517 million.

The number of revenue-generating road trips exceeded pre-pandemic levels and reached a record 113.8 million.

This was up 13.8 percent year-on-year supported by strong macroeconomic conditions in Dubai. 

The number of vehicles registered with the toll operator increased by 8.2 percent to 4 million – a 2 percent increase quarter-on-quarter, according to the filing.

Its overall cash position was robust, it said. The company generated a free cash flow of AED357 million in Q2.

Net profit for the half year 2023 was up 3.6 percent year-on-year to AED548 million.

Salik said its board approved the full payout of this amount as dividends, equivalent to 7.30 fils per share.

Its share price was up 1.2 percent as of 2pm on Friday UAE time. 

The company’s chief executive Ibrahim Sultan Al Haddad said: “Salik’s strong financial and operational achievements for the second quarter of 2023 continued to build upon our listing on the DFM in September last year. 

“They reflect Dubai’s economic resilience and an unprecedented surge in the usage of our toll roads. The success validates our robust business model.”

Chairman Mattar Al Tayer added: “Revenue-generating trips not only surpassed pre-Covid levels, but they also increased from the previous quarter, in spite of the typical seasonality effects.”