Salik signals stronger growth ahead as profits surge

Dubai road toll operator Salik has recorded a nearly 9 per cent rise in its third-quarter profit after tax, underpinned by a growth in revenue-generating trips that are expected to rise further next year.

This is also expected to help boost the company's bottom line, alongside the opening of two new toll gates this month.

Net profit in the three months until the end of September climbed 8.8 per cent annually to Dh277.3 million ($75.5 million), the company said on Wednesday in a filing to the Dubai Financial Market, where its shares trade.

Revenue for the quarter increased 7.3 per cent to Dh546.1 million, with earnings before interest, taxes, depreciation and amortisation (ebitda) jumping 14 per cent to Dh376.7 million. Toll use revenue rose 5.7 per cent annually to Dh468.4 million, while revenue from fines and penalties in the third quarter rose almost 8 per cent to Dh58.7 million. The number of net violations grew 0.8 per cent to hit about 670,000 during the quarter.

For the first nine months of the year, net profit was up 2.4 per cent annually at Dh822 million, with revenue 6.2 per cent higher at Dh1.64 billion. Toll use revenue grew 5.1 per cent on an annual basis to Dh1.42 billion.

Fines and penalties grew 7.6 per cent to Dh174.8 million, contributing 10.7 per cent to the total revenue during the period, while ebitda leapt nearly 9 per cent to Dh1.12 billion.

The growth in Salik's financials was underpinned by revenue-generating trips – net toll traffic minus fines and unreconciled transaction trips – which grew 5.7 per cent year-on-year to 117.1 million in the September quarter. For the nine months to September, that figure grew 5.1 per cent to 355.6 million. Revenue-generating trips are the driver for Salik's toll fees revenue and constitute the bulk of its overall revenue.

The company said it expects revenue-generating trips to grow 7 per cent to 8 per cent this year, which would then surge by as much as 25 per cent in the next fiscal year, especially with the opening of its new toll gates at Business Bay Crossing and Al Safa South, where operations are to begin on November 24.

The new gates are a “continuation of the RTA’s strategic plan” to enhance road networks and public transport lines, as well as improve the flow of traffic within Dubai, said Salik chairman Mattar Al Tayer.

The quarter also includes the first full three-month performance of Salik's barrier-free parking system at Dubai Mall, contributing Dh2.57 million from 3.8 million transactions.

This is part of the company's “strategic progress” and “commitment to enhancing mobility in Dubai … a key initiative to diversify our revenue base that is already contributing positively to our financial performance”, Mr Al Tayer said.

Salik was established as a public joint stock company in June 2022. Since July 2022, it has been operating as a separate legal entity from the Roads and Transport Authority through a 49-year concession agreement.

The company was part of Dubai's plans to list state-owned companies to increase the size of the DFM to about Dh3 trillion, and to encourage the listing of more private companies from sectors such as energy, logistics and retail.

“We remain encouraged by positive trends in Dubai’s economy, which are supportive of our own growth,” said Ibrahim Al Haddad, chief executive of Salik.

Salik's shares were up about 0.2 per cent at Dh5.11 in noon trading in Dubai.