ADNH Catering to Pay $49.01 Million Dividend Next Year

ADNH Catering, a leading food and support services provider in the UAE, has implemented a dividend policy that align with its financial performance, with semi-annual cash dividend payments, on Friday said that it will distribute a cash dividend of $16.34 million for the financial year 2024 in April 2025.

In 2025, the company aims to pay a total cash dividend of $49.01 million and in 2026, it plans to increase the annual dividend by at least 5% over the previous year, demonstrating management and the Board’s confidence in its future earnings and cash flow generation.

From 2027 onwards, the company intends to maintain a progressive dividend policy linked to financial performance, with semi-annual cash dividend distributions, ADNH Catering said in a regulatory filing with Abu Dhabi Securities Exchange (ADX) in the morning.

The company reported revenue of $330 million during the first nine months of 2024, resulting in EBITDA of $45.47 million at an EBITDA margin of 13.7%.

ADNH Catering’s efficient supply chain management, operational efficiencies and proactive contract management was reflected with the company reporting a pro forma net profit of $29.95 million at a robust net profit margin of 9%.

Healthy Growth

ADNH Catering CEO Clive Cowley said that over the course of this period the company has achieved healthy growth in contracts, particularly in supporting services segment, underscoring its commitment to strategic expansion across key verticals and geographies.

“As we continue to focus on diversifying our service offering to meet client needs, driving value, and deepening our market presence in high-growth sectors, we are pressing ahead with our plans to grow and consolidate our presence both in Saudi Arabia and the UAE,” he said.

“We remain focused on building on this strong foundation to deliver exceptional client service, profitable growth and sustainable shareholder value creation,” Cowley added.

New Businesses

ADNH Catering’s growth strategy is centred on both organic and inorganic expansion to drive long-term growth.

The core focus on winning new business and retaining key clients through active tender participation has delivered 37 new contracts and 20 clients over the last nine months, with 15 new contracts and seven new clients secured in the most recent quarter, with a retention rate of over 97% on average for the last 12 months.

The company is also actively pursuing inorganic growth through targeted bolt-on acquisitions outside its core catering operations, aimed at broadening service offerings and expanding into high-potential sectors and underserved regions, including in education and energy.

ADNH Catering is also actively pursuing growth opportunities in Saudi Arabia, where it is in talks to increase its stake in its existing joint venture, and where it sees compelling opportunities in the Eastern Region, Jeddah and Riyadh, particularly in private healthcare.

Key Financial Indicators

While the revenue base for the first nine months of2024 increased by 12.1% y-o-y due to proactive business selection in tandem with scaling of operations, actual revenue fell on a comparative basis due to a change in its revenue recognition model for part of its support services business and as a result of a voluntary decision in 2023 to de-risk the business by opting out of a contract that did not deliver on ADNH Catering’s strict profitability requirements.

As such, resources were reallocated to focus on more profitable areas and to reduce reliance on large contracts. With growing diversification in its contract base, the company’s dominant catering business is well balanced across sectors.

Despite a high inflationary period, the company’s stable base of contract profitability continued to see higher costs mitigated by effective supply chain management, operational efficiencies and proactive contract management.

Management Outlook

ADNH Catering maintains a positive outlook on its growth prospects, as its expanding addressable market offers compelling opportunities to increase market share. The Company’s focus continues to be on maintaining high client retention rates above 95% over the near- and medium-term, as it strengthens its position in key sectors.

With a disciplined approach to scaling operations, ADNH Catering aims to drive revenue growth by 5%-7% annually from 2025 over the near and medium term, while achieving an EBITDA margin of 13%-14% over the same periods.