Dnata expects to acquire businesses in the ground travel services segment in the Far East as Emirates Group’s ground handling and travel services unit recorded its most profitable year in 57 years.
The company’s profit crossed Dh1 billion for the first time in the financial year ending March 31, a 16 per cent rise, and revenues grew Dh10.6 billion, up 16 per cent, thanks to the integration of Stella Travel Services, acquired in 2014, and organic growth, Sheikh Ahmed bin Saeed, the chairman and chief executive of Emirates, said yesterday.
Dnata’s cash balance rose 10 per cent to touch Dh3.5 billion in its financial year, which will help it in its acquisition spree.
“Hopefully, we will conclude a destination and leisure acquisition [engaged in ground tour activities] in the Far East covering many countries in the coming months,” said Gary Chapman, the president of dnata.
“We are looking at destination leisure management companies in Asia, because we see that as a natural add-on.
“We are sending a lot of people through our travel businesses from the Middle East and from the UK to the Far East.”
Last year, it invested Dh585 million in new acquisitions, in addition to developing human resources, facilities and technology. Dnata will tread cautiously in entering India, where Emirates runs some of its busiest routes, and China, where the airline is adding new destinations each year.
Dnata does not have a presence in India at present, nor a significant presence in China.
“Yes, I would like to be in India and China but not at any price,” said Mr Chapman.
“India is littered with graveyards of international ground handlers and caterers who have failed to achieve the goals they expected.
“Same for China.”
Dnata would look at growing its airport and cargo handling business in South America.
“In airport handling, we have gone into Brazil, see that as a platform to move into other countries in South America,” Mr Chapman said.
“South America has some challenges at the moment, but these things change, and we thought it was a good time to enter.”
In December, it acquired RM Ground Services in Brazil.
Dnata’s acquisitions so far have been primarily in Europe and the UK. Last month, it purchased Michigan-based Ground Services International.
It now has a presence in 20 airports in the US, escalating from one at the end of 2014-15 financial year.
Dnata provides cargo, catering and ground handling services to 129 airports across the world, up from 78 at the end of 2014-15 year. About 64 per cent of its revenues came from outside the UAE in the 2015-16 financial year.
Dnata’s revenues from international operations rose 32 per cent to Dh2.1 billion, as it handled 178,000 aircraft, up by 63 per cent, and moved 1.4 million tonnes of cargo, up by 46 per cent. The travel services division is dnata’s largest segment by revenue, posting a 34 per cent rise to touch Dh3.3bn.
It sold Dh11.7bn worth of travel services during the financial year, a 20 per cent increase.
In September, dnata acquired a 30 per cent stake in Italy’s Airport Handling.
In July, dnata acquired the Belgian company Aviapartner’s cargo handling operations at Amsterdam’s Schiphol airport.
Its catering division’s revenues fell 7 per cent to Dh1.9bn owing to the strong US dollar.
In the UK, it is one of the largest travel agents.
In 2014, it bought Thomas Cook’s Gold Medal for £45m (Dh238.5m) and acquired UK-based Travel Republic in 2012.
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