Tecom Group’s H1 2023 net profit up 13% to Dhs485m

Tecom Group has announced its financial results for the second quarter and first half of the year (H1) ending June 30, 2023.

The group has delivered a strong performance driven by sustained high occupancy levels across its diverse high-quality portfolio, reporting a 6 per cent year-on-year increase in revenue to Dhs1.05bn and a 13 per cent YoY increase in net profit to Dhs485m in H1 2023.

Malek Al Malek, chairman of the Board, Tecom Group, said: “Our performance was underpinned by Dubai’s robust economy and its visionary leadership. On the back of our exceptional results, I am pleased to announce that the Board has approved an interim dividend distribution of Dhs400m to shareholders for the first half of this year, to be distributed in September 2023.”

Abdulla Belhoul, chief executive officer, Tecom Group, added: “Commercial real estate in Dubai is growing at a steady pace owing to Dubai’s appeal as a global city to businesses, talent and investors alike and to its macroeconomic resilience. Our robust business model and our business districts’ market reputation have enabled Tecom Group to capitalise on the strong demand, supporting our solid performance during the period. The vast majority of our leased assets, especially Grade A centrally located offices, have recorded high occupancy rates.

“We are confident in our ability to sustain occupancy levels for the remainder of the year while also focusing efforts to drive further efficiencies to sustain the strong EBITDA margin. We will continue to execute our clear strategy, supported by our robust financial position, top-notch talent, and access to strategically located land bank to help unlock greater value for our shareholders.”

H1 2023 financial highlights

In H1, the occupancy level for commercial and industrial assets was 87 per cent as of June 30, registering a 5 per cent increase from the period ended June 30, 2022. The overall customer retention rate stood at 92 per cent as of June 30, 2023.

Meanwhile, the group also saw 18 per cent YoY increase in number of customers, surpassing 10,000 customers including multinational and regional companies. Some of the new customers include Salesforce, which established its first Middle East office, as well as pharmaceutical giant AstraZeneca, biotechnology company Virax Biolabs Group, business school EM Normandie, F&B supplier and manufacturer Iffco Group (Thryve factory).

مجموعة تيكوم تعلن عن نتائجها المالية للربع الثاني والنصف الأول المنتهيين في 30 يونيو 2023، حيث حقّقت أداءً قوياً مدفوعاً بالمحافظة على معدلات الإشغال المرتفعة عبر محفظة أصولها المتميزة والمتنوّعة، إذ سجّلت خلال النصف الأول من العام زيادةً في الإيرادات بنسبة 6% على أساس سنوي… pic.twitter.com/Pu3VoWReB5

— Dubai Media Office (@DXBMediaOffice) August 2, 2023

EBITDA increased by 14 per cent YoY to Dhs825m, mainly driven by improved revenue quality and enhanced management of operating expenses.

Furthermore, net profit grew by 13 per cent YoY to Dhs485m, underpinned by strong top-line performance, continued growth across all business segments, enhanced operational efficiencies, improved leverage position and lower total financing cost.

Funds from operations (FFO) stood at Dhs678m, representing an increase of 8 per cent YoY.

Q2 2023 financial highlights

The revenue in Q2 2023 increased by 6 per cent YoY to Dhs535m and also registered a solid sequential growth on the sustained demand across group’s portfolio.

EBITDA grew by 14 per cent YoY to Dhs426m, impacted positively by ongoing efforts to reduce operating expenses and drive operational efficiencies.

The net profit for the three-month period increased by 19 per cent YoY to Dhs283m, excluding the impact of the one-off expense related to settling the old loan facility.

Meanwhile, the group’s debt profile has improved with loan-to-value (LTV) ratio of 15 per cent and a 5.7x EBITDA to interest ratio, on the back of the immediate positive impact of the recent refinancing of the existing Dhs7.6bn loan facility, which was refinanced at lower margins and more favourable terms.

H1 2023 key business highlights

Tecom Group has had a very active year across most of its business districts, a reflection of the strong level of business confidence. In line with the rising demand for purpose-built and well-connected workspaces, the group expanded its D/Quarters co-working solutions to Dubai Science Park.

The group continued to enable the entrepreneurial ecosystem in Dubai by launching a science-focused incubator in collaboration with Dubai Science Park. in5 Science will support startups under the Dubai Economic Agenda D33 umbrella.

Virax Biolabs Group announced the establishment of its regional headquarters at Dubai Science Park, further strengthening the region’s scientific research and biotechnology landscape.

Dubai Industrial City contributed further to the emirate’s economic growth by attracting approximately Dhs1bn in investments from local and global manufacturing companies, reflecting the confidence in the business district and Dubai as a strategic destination for manufacturing and industrial activities.

Dubai Industrial City also signed major strategic partnerships with the Ministry of Industry and Advanced Technology, the Ministry of Climate Change and Environment, the Emirates Development Bank (EDB), and Dubai’s Department of Economy and Tourism to support the sustainable development of the manufacturing sector in the UAE and strength its position as an attractive global industrial hub.

Read: Tecom Group secures $2.1bn refinancing deal for existing facility