SAUDI ARABIA – Leading catering company ADNH Catering has revealed plans to leverage the Saudi Arabian market through increasing its equity in food service company Compass Arabia from 30% to 50%.
The acquisition is part of ADNH Catering’s strategic initiative to boost its revenue and profit margins.
The company expects this move to generate an additional annual net profit of approximately AED 100 million (US$27.2 million), further solidifying its position as a leading provider of food services in the region.
ADNH highlighted that the acquisition aligns with its goal of increasing revenues and profitability from key business segments, while also ensuring long-term growth and value for its stakeholders.
This acquisition, facilitated through its catering subsidiary, is a significant step toward achieving these objectives.
With the regulatory and legal procedures for the transaction expected to conclude soon, ADNH will gain full control over Compass Arabia’s operations, marking a notable advancement in its growth strategy.
The announcement comes just a month after ADNH made its debut on the Abu Dhabi Securities Exchange (ADX).
At the time of listing, the company’s market capitalization was approximately US$588 million, and it recently raised AED 864 million (US$235 million) through its initial public offering (IPO).
In addition, ADNH Catering reported revenue of AED 1.2 billion (US$326.7 million) for the first nine months of 2024, with an EBITDA of AED 167 million (US$45.6 million), reflecting an EBITDA margin of 13.7%.
The company’s net profit for the period stood at AED 110 million (US$29.9 million), resulting in a solid net profit margin of 9.0%. This strong performance was attributed to efficient supply chain management, operational improvements, and effective contract management.
While base revenue saw a 12.1% year-on-year increase, driven by strategic business selections and operational scaling, overall revenue declined compared to the previous period.
This decline was mainly due to a change in the revenue recognition model for certain support services and a voluntary decision in 2023 to exit a contract that did not meet the company’s profitability standards.
Consequently, ADNH Catering redirected resources towards more profitable ventures, reducing its reliance on large contracts. As part of this shift, the company’s catering business, which remains dominant, is now more diversified across sectors.
This strategic realignment is further reflected in the company’s decision to increase its stake in Compass Arabia, which provides services in catering, food distribution, logistics, housekeeping, and laundry.
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