Yahsat's second-quarter net profit surges 78% on strong business performance

Al Yah Satellite Communications, better known as Yahsat, said its second-quarter net income surged 78 per cent as revenue received a boost from the strong performance of all its business segments.

Net profit attributable to shareholders in the three-month period to the end of June was Dh93 million ($25.32m), the company said on Tuesday in a regulatory filing to the Abu Dhabi Securities Exchange, where its shares are traded.

Adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) rose by 4 per cent a year to Dh235m, generating an ebitda margin of 59.8 per cent.

Revenue for the reporting period rose by 7 per cent to Dh392m ($106.7m), driven primarily by the company’s managed solutions and mobility solutions businesses.

Infrastructure accounted for more than half of the group's revenue in the quarter.

Meanwhile, Yahsat’s first-half revenue stood at Dh755m, having increased by more than 8 per cent from the same period a year ago.

“The revenue growth in the first half of the year is the highest in the company’s history, largely driven by revenue from managed solutions and mobility solutions, which increased by more than 35 per cent and 24 per cent, respectively,” chief financial officer Andrew Cole told The National.

Currently, government contracts make up most of the company's revenue and it is working on a number of projects to diversify its revenue streams through other channels, he said.

“We are already present in areas such as data and satellite phone services to [the] oil and gas sector, maritime and shipping services, agriculture research and weather forecast. These are fast-growing business segments outside the government contracts,” Mr Cole said.

The company’s net profit attributable to shareholders in the six-month period stood at Dh167m, up more than 50 per cent from the same period in 2021.

“Yahsat has delivered exceptional results, recording its highest-ever first-half revenue and demonstrating our performance-driven culture to deploy innovative capabilities and grow the business,” said group chief executive Ali Al Hashemi.

“We remain committed to pursuing and launching new growth opportunities across the business and we are confident that Yahsat’s robust balance sheet, business resilience and track record in delivering exceptional results will enable us to capture significant value to drive long-term growth.”

The group's contracted future revenue stood at more than Dh7.7 billion, about 5.2 times its annual revenue.

As at the end of second quarter, the company raised its projected 2022 revenues to at least Dh1.54bn with the upper end of the range unchanged at Dh1.6bn.

The company is confident of narrowing the range of its 2022 guidance provided in March, Mr Cole said.

“With almost 90 per cent of remaining projected revenue for the current year already secured, we remain very confident in our outlook and guidance for financial year 2022,” he said.

Despite challenging global economic headwinds, Yahsat's strong performance “reflects the strength of our business, underpinned by strong contracted future revenue and positive momentum across operating segments”, said chairman Musabbeh Al Kaabi.

Founded in 2007, Yahsat operates in more than 150 countries across five continents. Its five satellites reach more than two thirds of the world’s population.

In October, Yahsat was appointed by the UAE government to conduct a detailed assessment of two new planned satellite launches by 2026, a move that would help it to “further bolster its contracted future revenues and secure its longer-term financial outlook”, the company said at the time.

One of the major projects that Yahsat is working on is the Thuraya 4 next-generation satellite (T4-NGS), which is scheduled for launch next year.

The satellite is expected to begin offering commercial services in the second half of 2024.

Overall, about 85 per cent of Yahsat's Dh698m projected capital expenditure and investment in 2022 is expected to relate to the T4-NGS programme.

“The capex related to the T4-NGS programme is almost fully financed through a combination of debt through export credit arrangements and significant upfront payments we received from the UAE government, one of our key customers,” Mr Cole said.

In October last year, Yahsat was also appointed by the UAE government to conduct a detailed assessment and recommendation for two new satellites, Al Yah 4 and Al Yah 5, which are set for launch in 2026.

“We are currently evaluating the cost of this project and how they will be financed. Our balance sheet with very low leverage gives us the room to raise funds through debt to fund the programme,” Mr Cole said.

In April, Yahsat's shareholders approved the company's updated dividend policy that allows the payment of semi-annual payouts going forward.

For the 2022 financial year, the company is expected to pay a total dividend of Dh393m, or 16.12 fils a share, split into two equal instalments that will be paid around October this year and in May 2023, the company said.

“We remain very confident in both our short-term and long-term outlook, and have accordingly increased the lower end of our revenue guidance for FY2022, whilst reiterating our commitment to pay a progressive dividend,” Mr Al Hashemi said.

The company said it is confident to grow its dividend by at least 2 per cent per year.

“We are absolutely sure about dividend policy, [that it] is well supported by strong revenue streams, especially the contracted future revenue that is in excess of $2bn. High cash conversion and strong discretionary free cash flow too are key supporting factors for our commitment,” Mr Cole said.