Half a century ago, Galadari Brothers Group had a claim to being Dubai’s most successful family firm. Over the years, its influence has waned, while some of the emirate’s other trading families have seen their businesses expand at a rapid pace. In the 1980s, the firm became financially stressed due to over-exposure and commitments.
But the problems didn’t end there. In 2001, Galadari Brothers lost the rights to distribute Ford vehicles in the UAE, a contract that went to the Al Tayer Group. Then, in 2006, the Investment Corporation of Dubai (ICD) — the emirate’s sovereign wealth fund and owner of Emirates, Emaar and other local giants — took a 30 percent stake in the group.
The man charged with returning Galadari Brothers to its former glory is Egyptian national Khaled Soliman, who took on the group chief executive position in 2009 after a successful period running its heavy machinery division.
“I believe in ten years time, you will see Galadari Brothers in the top league again, in the top three groups,” says Soliman. “We are strong, our fundamentals are very solid and we have a steady growth strategy.”
It all sounds like a bit of a tall order, but one suspects that the board may have found the right man for the job. After all, the company still has an impressive portfolio of assets, from Galadari Ice Cream, which runs more ‘quick-service’ restaurants in the Gulf than anyone else, to dealership rights for Mazda in the UAE. In between, there’s construction equipment and machinery, steel structures, a steady property and hospitality portfolio and ownership of the Khaleej Times, an English-language newspaper.
Managing such a diverse list of industries is no easy task. Soliman, however, has a pretty decent track record. Having trained as a civil engineer, he worked with US construction giant Bechtel on a series of major oil and gas and petrochemicals projects in Saudi Arabia. He then carried out some marketing and sales work for a subsidiary of BP, before switching to the UAE, and a career in the automotive industry in 2000. Moving to Galadari Brothers, he managed to grow its heavy construction equipment business by five times in just three years.
“I changed industries, I changed sectors and I did that as a deliberate career design, to adjust and fit into different industries,” Soliman says. “I wanted to prove that management is management — if you can do it successfully in one sector, you can do it in any other, the fundamentals are the same.”
Despite taking over the top job at a particularly tough time both for Dubai and the global economy, Soliman’s experience is beginning to pay off. As Galadari Brothers is a privately held company, numbers are tough to come by, but the chief executive says that last year, the overall business grew by between 15-20 percent.
“Last year was a very good year for us,” he says. “It was an extremely important year as it was the first year in a long time we actually started diversifying our business, and expanding into new territories.
“In terms of our business portfolio we had an excellent year where we managed to score great success in each and every business line.”
In 2013, the company relaunched Galadari Automotive in a bid to attract a younger consumer, while Soliman also says its heavy construction equipment division (which has the rights to sell Komatsu products in the UAE) now has a bigger share of the market than any of its competitors.
But the really big news came overseas. After years of hibernation, Galadari Brothers was back on the expansion trail last year, taking an 80 percent stake in Australia’s Palm Oasis Ventures, the local franchisee for ice cream brand Baskin-Robbins. That deal will see the company open about 200 Baskin-Robbins outlets Down Under in conjunction with Dunkin’ Brands, owner of the ice cream maker, which holds the other 20 percent stake.
The move reflects the strength of Galadari’s relationship with Dunkin’ Brands back in the Gulf, where it is aiming to open 1,000 Baskin-Robbins and Dunkin’ Donuts stores by 2018. Right now, it is opening stores at the rate of more than one a week.
“It’s a continuous process, we will never slow down,” says Soliman. “The markets in the Middle East are developing, and countries like Saudi Arabia and the UAE can absorb as much as we can deliver. Then there’s Australia, where we have serious plans. About 75 percent of Australia is unregulated in terms of branding, and it’s the third-largest consumer of ice cream per capita.”
As well as Australia, Soliman says the company also has plans to bring both brands to North Africa, although he doesn’t provide a specific date.
Aside from restaurants, Galadari Brothers also has big plans for the oil and gas services sector, in what is a relatively new industry for the firm. It has started the acquisition process for an unnamed Omani company based in Sharjah’s Al Hamriya Free Zone, which manufactures steel products, like pressure vessels, pipelines and other specialised products, for energy companies.
“It’s a sector that is serving the power, water and oil and gas industries, and that’s a very strong sector in the Gulf,” Soliman says, without giving a potential value for the buyout. “It’s also a strategic expansion for our existing steel structure manufacturing company into a healthier sector.”
The acquisition, if completed, would make sense given the recent performance of Galadari Engineering Works, which manufactures steel structures and products.
“This industry is one of the most challenging at the moment, because competition is so tough,” says Soliman. “And the market is not yet healthy. Projects are coming, and we are receiving more and more invitations [to bid] every day, but the market is still in a difficult position.
“It’s simply because we are coming out of a serious slowdown; post-crisis, there were very few projects in the market, and many competitors in the industry, so prices and profitability were both under extreme pressure.”
Another sector that has been performing slightly better is the heavy construction equipment division, which provides bulldozers, excavators and forklift trucks to contractors across the UAE. Given the recent slew of megaproject announcements in Dubai, the future for this market looks strong, although Soliman says that the division hasn’t yet reached the pre-crisis heights. But as those announcements start to trickle down through the system, and projects are handed out to contractors, he is confident that performance will improve.
“We are far from levels we used to be in pre-2008 and that is, of course, related to the size of the construction industry at the moment,” he says. “I still believe the construction industry is yet to develop fully, and expect the next three years to take us back to the levels we were at pre-crisis.
“Nevertheless, our market share growth last year was the best in the industry.”
In terms of car sales, the chief executive says that the firm has been performing in line with the generally strong industry players elsewhere in the UAE. Last year, Galadari Automobiles opened a new ‘House of Mazda’ showroom on Sheikh Zayed Road, in what Soliman says was the “first major investment in the infrastructure of Mazda for a very long time”. He also points out that the focus in the near term will be to expand Mazda facilities in the rest of the northern emirates.
Finally, in the hospitality segment, Galadari Brothers also owns the Radisson Blu Hotel — billed as the first five-star hotel in the Gulf when it opened in 1975 — on the Creekside in Deira, a property Soliman describes as the “Savoy of Dubai”. That hotel is currently being renovated, and the chief executive says there are plans for an additional property too.
“We are looking to build another hotel in Deira as well — again, that’s 300-400 rooms,” he says. “That will take place in the very near future if the project is confirmed. We also have plans to renovate our hotel in Colombo [Sri Lanka]. There’s been 20 years of civil war, so now is the time to renovate and we are investing heavily.”
For 2014 in general, Soliman is predicting “continuous growth” along the same lines as last year.
“It had a slower start, but we are seeing things develop now better in the second quarter,” he says. “The first quarter was reasonable, but if you compare the first quarter to the last quarter of 2013, that [last quarter] was a very strong quarter that really motivated staff in all industries. Our forecast is for 2015-2016 to be better than 2014.”
Further on down the line, Soliman says that there is no plan to diversify the group into other industries. He also indicates that neither the company as a whole, nor any of specific decisions, are being lined up for an IPO in the near future.
“I haven’t heard of any such intentions or plans from the board or from shareholders,” he says. “Nevertheless I think listing is an excellent solution for family groups, as it will really improve many areas, from operations to corporate governance.”
Can Galadari Brothers return to its more illustrious past? The road back looks like being a long one, but in Khaled Soliman, the company looks like it has the man it needs to take it back to the top.For all the latest industry news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.