ADNH Catering, a leading food and support services provider in the UAE, has reported strong financial performance in Q4 2024, driven by healthy growth in new contracts and the retention of key existing clients and margin improvements. 

 

Revenue for the fourth quarter of 2024 grew 12% to AED443 million ($120.61 million). EBITDA was up 22.2% year-on-year to AED66.5 million with an improved EBITDA margin of 15%. Net profit improved by 20% to AED44 million, demonstrating the positive impact of ADNH Catering’s robust supply chain management, operational efficiencies and proactive contract management. 

 

Pro forma revenue for the 12 months ended 31 December 2024 was AED1.7 billion. On an adjusted like-for-like basis, excluding the one-off negative impact of the company’s decision in 2023 to de-risk its portfolio by exiting the unprofitable contracts and the change in its revenue recognition model for part of its support services business, full-year pro forma revenue improved 12.9% against 2023 (whereas on an unadjusted basis it declined by 2.6%). 

 

Pro forma net profit for the 12-month period was AED153.6 million improving by 1% when adjusted for the impacts stated above, and declining by 25.6% on an unadjusted basis.

 

Clive Cowley, CEO of ADNH Catering, said: “Our strong performance in both the full-year and fourth quarter reflect the continued execution of the growth strategy we set out during our IPO. Our expansion in Saudi Arabia by increasing our stake in our joint venture will allow us to grow our operations across business segments and provinces in the kingdom. 

 

"Complimenting this regional expansion, we are proving our capacity to continuously secure new contracts while maintaining a retention rate of over 97%, underscoring our market-leading position and our ability to deliver on our commitments and capitalise on market opportunities. These achievements highlight the strength of our business model and the commitment of our entire team to creating long-term value for our stakeholders. We remain focused on driving sustainable growth by not only expanding our footprint but also growing within key sectors, ensuring that we continue to meet the evolving needs of our clients and reinforce our regional leadership," Cowley said.

 

Growth drivers

ADNH Catering secured 14 new contracts in Q4 and 61 new contracts over the past 12 months, bringing the total number of contracts to 388 in 2024. As of 31 December 2024, the company served a total of 283 clients. The company maintained an industry-leading average retention rate of over 97% during the year, underscoring its focus on securing new business while strengthening key client relationships through active tender participation, it said.

 

In December 2024, ADNH Catering advanced its strategic expansion in Saudi Arabia by signing a sale and purchase agreement to acquire an additional 20% equity stake in its Saudi Joint Venture (Saudi JV), increasing its ownership to 50%. Upon completion, expected in H1 2025, the business will be consolidated into ADNH Catering.The company has a strategic plan to drive SAR500 million in growth for its Saudi JV over the next 3-5 years in alignment with its vision to leverage opportunities in the Saudi market. 

 

Saudi Arabia’s economic development and growth of high-potential sectors, such as private healthcare and energy remain key pillars of the Company’s strategy. Building on a decade of partnership and a 17% increase in clients served from 2021 to 2023, ADNH Catering plans to continue to leverage its expertise and proven track record to expand its operations and capture market share across the kingdom, the company said.

 

As part of its strategy to pursue horizontal integration and adjacent expansion, ADNH Catering continues to make significant progress with “Husk”, its coffee and grab-and-go brand. By the end of H1 2025, 25 outlets are expected to be operational across the UAE, with an additional 25 locations set to open in H2 2025. This expansion reflects ADNH Catering’s commitment to diversifying its offering and enhancing customer convenience, it said.

 

In  a post-period event in January 2025, ADNH Catering continued to pursue inorganic growth through targeted bolt-on acquisitions, announcing the all-cash acquisition of 100% of the share capital of Food Nation Catering Services, a chef-driven school catering business in the UAE that currently feeds more than 70,000 students across three emirates. The transaction is in line with the company’s strategy to broaden its service offering and expand into high-potential sectors such as education. 

 

The company’s stable base of contract profitability continued to see higher costs mitigated by effective supply chain management, operational efficiencies and growth in new contracts. 

 

Management outlook

Management and the board have a positive outlook for growth in 2025, supported by an expanding addressable market that offers significant opportunity to win new business and increase market share and inorganic growth. The company’s full-year performance exceeded expectations, with a particularly strong Q4 driven by growth in new contracts, retention of existing contracts, and margin improvements, with sustained momentum carrying into 2025.  - TradeArabia News Service