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Dubai's exclusive toll gate operator, Salik, achieved strong financial performance in 2023, reporting 2.1 billion UAE dirhams in revenues, fueled by a surge in toll usage, with over 461 million revenue-generating trips, marking an 11.7 percent increase from the previous year.
In an exclusive interview with Zawya Projects, Ibrahim Al- Haddad, CEO of Salik, attributed the remarkable growth to Dubai's sustained appeal as a tourist and residency destination, fostering increased traffic through the city's toll gates.
“Growth was driven by increased toll usage, representing the lion’s share of our total revenue, which was supported by continued strong growth in tourism and residency, as Dubai remains a highly attractive destination for visitors and individuals relocating to the city,” said Al-Haddad.
Salik maintained EBITDA and net income margins of 65.9 percent and 52.1 percent respectively, in 2023.
“We’ve maintained very healthy EBITDA and net income margins to deliver net income of almost AED 1.1 billion – 100 percent of which we will distribute to shareholders having already paid a dividend for the first half of 2023 and having confirmed our final dividend for the year,” he said.
Looking ahead, the company aims to diversify its revenue streams beyond toll usage fees and fines. Al Haddad revealed plans to explore ancillary revenue opportunities, exemplified by a recent collaboration with Emaar Malls for private parking fee collection at Dubai Mall.
Excerpts from the interview:
Can you provide insights into Salik's plans for revenue diversification and growth in 2024?
Salik’s revenue model currently consists of toll usage fees and fines. However, going forward, we are actively looking to diversify our revenues into ancillary revenue-generating opportunities, and this is a key component of our updated corporate strategy. Our agreement with Emaar Malls for private parking fee collection system is a testament of our commitment to diversify our revenue streams from the core tolling business.
When it comes to the core tolling business, we are very encouraged by positive macroeconomic and population trends in Dubai, and we expect revenue-generating trips in 2024 to increase in the range of 4-6 percent, a continuation of the strong growth momentum seen in 2023. We also expect to achieve a healthy EBITDA margin in the range of 65-66 percent, as we pursue strategic growth objectives across our core business.
It should also be noted that earlier this year we announced the addition of two new Salik gates to the Dubai roads network, which will be operational by the end of 2024. It is too soon to forecast the financial impact of these gates, but we expect to provide guidance on how they’ll contribute to our revenue base in due course. This will bring the total number of Salik gates from eight to 10.
Can you elaborate on the partnership with Emaar Malls for managing parking at Dubai Mall?
Our cooperation with Emaar Malls will provide Dubai Mall with a convenient parking fee collection system that will deliver a seamless, smooth and barrier-less experience to customers. The project currently covers only Dubai Mall, but if Emaar Malls or other partners see a need for the solution in other locations, then we would be pleased to extend the service through new agreements.
This cooperation clearly aligns with Salik’s strategy of providing seamless, sustainable, and smart mobility solutions and delivers on our objectives to diversify into complementary business streams.
Is Salik considering market expansion beyond its current toll gates, either within Dubai or regionally?
As part of our strategy to thrive in the tolling business, we will consider the expansion of our core tolling solutions business to other geographies. This is a medium and long-term aspiration for Salik’s inorganic growth in regional and international markets, and something that we will selectively pursue in the future.
Closer to home, we recently partnered with TAMM, integrating Salik’s solutions into the Abu Dhabi Government Services platform and enabling TAMM users to add and recharge Salik accounts. This proves there is plenty of opportunity for enhancing and growing our core offering within the borders of the UAE, as well as in international markets.
How does Salik intend to balance the expansion of its core tolling business with the pursuit of new strategic initiatives?
Diversification of our business through the growth of ancillary revenue is a key component of our updated corporate strategy. We have a range of opportunities in the pipeline, including the monetisation of data, advertising on our Salik gates and platforms, alongside other mobility solutions, as well as delivering a seamless parking experience – for example through the aforementioned cooperation with Emaar Malls.
Between 2024 and 2028, we expect the contribution of ancillary businesses to our consolidated revenues to increase gradually, and we are excited to tap fresh new opportunities to both strengthen and diversify Salik’s revenue base.
How does Salik stay responsive to evolving technology and incorporate innovation into its tolling operations?
We are supporting sustainable demographic and economic growth with best-in-class digital technologies and assets. The technologies that underpin Salik’s ability to optimise the performance of the world’s leading smart urban roadway network include best-in-class Radio Frequency Identification connectivity and Automatic Number Plate Recognition technologies at each of our 8 automatic gates.
Our leading suite of digital solutions will enable us to provide the technology for barrier-free parking at Dubai Mall, and our Smart Salik App makes it possible for our customers to navigate a digital ecosystem designed for ease and accessibility.
How has Salik's approach to achieving sustainable growth evolved since its IPO?
Since our IPO in 2022, two of the key strategic pillars we have focused on are to thrive in the tolling business and to build ESG stewardship. In addition, over the next five years, we will be focusing on two additional pillars to achieve sustainable growth and establish a future-proof company.
To achieve sustainable growth, we are looking to diversify into ancillary revenues to supplement our core revenues in the tolling business, and a focus on building a portfolio of vehicle-centred mobility services, as well as delivering a seamless parking experience.
We have recently developed our ESG strategy driven by a comprehensive materiality assessment, active stakeholder engagement, and alignment with the UN SDGs and the UAE's 2030 vision. We are committed to transparency and public disclosures, actively engaging with ESG rating providers to enhance our ESG performance. In addressing environmental concerns, our strategy focuses on crucial aspects such as GHG emissions and energy mix.
Social initiatives prioritise community engagement and employee well-being, while governance efforts emphasise clear ESG governance, ethical sourcing, and data privacy.
We have already delivered on key ESG commitments highlighted in the IPO, such as increased use of solar power where we have surpassed our initial plan to reach approx. 21.1 percent renewable energy usage in 2023 from 6 percent in 2022. We have also delivered on promises including investing in employees, promoting diversity, and providing excellent customer service, while also encouraging electric vehicles and reducing paper usage through digital transformation.
(Reporting by Syed Ameen Kader; Editing by Anoop Menon)
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