Dubai’s Salik reports Q4 profit growth after rising toll gate revenue

Company planning to pursue additional revenue sources beyond core tolling business

The Jebel Ali Salik toll gate in Dubai. Victor Besa / The National

Dubai toll operator Salik has reported a 3 per cent annual increase in its fourth-quarter profit, supported by higher revenue from toll gates.

Net profit for the period rose to Dh295 million ($80.3 million), the company said on Monday in a regulatory filing to the Dubai Financial Market, where its shares are traded.

Salik’s revenue rose 12.2 per cent annually to Dh563 million in the latest reported quarter, which helped offset a 21 per cent increase in net finance costs.

“We are thriving in the tolling business and remain focused on strengthening our core business offering as we expand our footprint within Dubai,” said Ibrahim Al Haddad, chief executive of Salik.

“At the same time, we are committed to delivering sustainable growth, with our updated strategy purpose-built to widen the revenue-generating opportunities that we pursue."

As part of its revised corporate strategy, the company plans to pursue additional revenue sources beyond its core tolling business, including providing technology solutions for parking.

In December, Salik teamed up with Emaar Malls to deliver a parking management system at Dubai Mall.

Salik is also focusing on building a portfolio of vehicle-centred mobility services that allow customers to pay for additional offerings directly through their Salik accounts, it said.

The company said revenue-generating trips during the fourth quarter rose 11.1 per cent year-over-year to 123.2 million. The revenue from toll usage fees, primarily generated through trips, constitutes the bulk of Salik's overall revenue.

For the full-year 2023, the company’s profit stood at about Dh1.1 billion, compared with Dh1.33 billion the previous year. Revenue during the same period increased by 11.4 per cent to Dh2.11 billion, driven by "strong macroeconomic environment and positive tourism trends", the company said.

Revenue-generating trips for the year reached new highs of 461.4 million, up 11.7 per cent on an annual basis.

Salik expects a 4-6 per cent year-on-year increase in revenue-generating trips for 2024, continuing the strong growth trend from last year, while maintaining a robust earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of 65 per cent to 66 per cent.

“The achieved results for 2023 are a testament to our strategic vision and commitment to delivering long-term value to our shareholders, as well as to the positive macroeconomic environment in the UAE,” said Mattar Al Tayer, chairman of Salik.

GDP growth coupled with strong tourism inflow indicate that Dubai’s initiatives to expand the economy are “bearing fruit”, he added.

Dubai’s economy expanded by an annual 3.3 per cent in the first nine months of last year, driven by growth in the emirate's tourism and transport sectors.

Emirates NBD expects Dubai's GDP to grow 4 per cent this year, compared with a 3.3 per cent expansion in UAE's economy.

Salik's initial public offering, a part of the Dubai government's strategy to expand its financial market, raised Dh3.73 billion in September 2022.

The offering was oversubscribed by more than 49 times across all tranches, with total gross demand reaching Dh184.2 billion.

The Dubai government sold more than 1.867 billion shares in the company, or 24.9 per cent, at Dh2 a share. The government retained a 75.1 per cent stake after the sale of the stake.