Abu Dhabi-based food and support services provider ADNH Catering has released its unaudited financial results for the three-month and nine-month periods ending 30 September 2024. On a pro forma basis, the company reported revenue of AED1.2 billion ($326.7 million) for the first nine months of 2024, resulting in an EBITDA of AED167 million and an EBITDA margin of 13.7 percent. The pro forma net profit reached AED110 million, showcasing a robust net profit margin of 9.0 percent. These results reflect ADNH Catering’s effective supply chain management, operational efficiencies, and proactive approach to contract management.
Clive Cowley, CEO of ADNH Catering, expressed satisfaction with the company’s initial results since its listing on ADX, highlighting a solid revenue foundation, healthy EBITDA margins, and strong free cash flow for the nine months ending September 2024. He noted that the company had experienced significant growth in contracts, especially in the support services segment, emphasizing their commitment to strategic expansion across key sectors and regions. Cowley indicated that as ADNH Catering continues to diversify its service offerings to meet client needs and enhance value, the company aims to strengthen its presence in high-growth areas, particularly in Saudi Arabia and the UAE. He also mentioned the company’s focus on leveraging its robust foundation to deliver exceptional client service, attain profitable growth, and create sustainable value for shareholders.
Strategy execution and growth drivers
ADNH Catering’s growth strategy prioritizes both organic and inorganic expansion to fuel long-term development. The company’s commitment to securing new business and retaining key clients through active participation in tenders has resulted in 37 new contracts and 20 new clients over the last nine months. In the most recent quarter alone, they secured 15 new contracts and welcomed seven new clients, maintaining an impressive retention rate exceeding 97 percent on average over the past year. Additionally, ADNH Catering is pursuing inorganic growth through targeted acquisitions outside its main catering operations, aiming to broaden its service offerings and venture into high-potential sectors and underserved markets, particularly in education and energy.
The company is actively exploring growth opportunities in Saudi Arabia, including discussions to enhance its stake in its existing joint venture, identifying attractive prospects in regions such as the Eastern Province, Jeddah, and Riyadh, particularly in the private healthcare sector. Furthermore, ADNH Catering is dedicated to driving margin improvement by enhancing operational efficiency, boosting productivity, and implementing strategic pricing initiatives to fortify its market position.
Revenue overview
For the nine-month period ending 30 September 2024 (9M 2024), pro forma revenue totaled AED1.2 billion, bolstered by a strategic focus on business selection and operational scaling. Year-on-year, the base revenue for 9M 2024 increased by 12.1 percent due to proactive business selection alongside operational expansion. However, a change in the revenue recognition model for a portion of its support services business led to a decrease in actual revenue on a comparative basis. Additionally, in 2023, the company made a voluntary decision to exit a contract that did not meet its stringent profitability standards, reallocating resources to focus on more lucrative opportunities and reducing reliance on large contracts. With a growing diversity in its contract portfolio, the company’s catering business remains well-distributed across various sectors.
Strong EBITDA performance
Despite navigating a period of high inflation, ADNH Catering’s stable contract profitability has effectively countered rising costs through strong supply chain management, operational efficiencies, and proactive contract oversight. For 9M 2024, the company achieved an EBITDA of AED167 million, reflecting an industry-leading margin of 13.7 percent, with EBIT reaching AED120 million and an EBIT margin of 9.9 percent. The net profit for the period stood at AED110 million, translating to a margin of 9.0 percent.
Read more: ADNH Catering raises $235.2 million in IPO
Dividend policy
ADNH Catering has established a dividend policy aligned with its financial performance, which includes semi-annual cash dividend payments. For the fiscal year 2024, the company plans to distribute a cash dividend of AED60 million ($16.3 million) in April 2025. In 2025, it aims to pay a total cash dividend of AED180 million. For 2026, ADNH Catering intends to increase the annual dividend by at least 5 percent compared to the previous year, reflecting the management and Board’s confidence in future earnings and cash flow generation. From 2027 onward, the company plans to uphold a progressive dividend policy linked to financial performance, continuing with semi-annual cash distributions.
Management outlook
ADNH Catering holds a positive outlook for its growth prospects, as its expanding addressable market presents significant opportunities for increasing market share. The company remains committed to maintaining high client retention rates above 95 percent in the near and medium term while solidifying its position in key sectors. With a disciplined approach to scaling operations, ADNH Catering targets annual revenue growth of 5-7 percent from 2025 onwards, alongside an EBITDA margin of 13-14 percent during the same period.
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