AD Ports Group has announced its financial results for the second quarter of 2023, reporting revenue growth of 66 per cent year-on-year to AED2.1 billion, driven by volume growth in key sectors, business diversification as well as local, regional, and international expansion both organically and through mergers and acquisitions (M&A). Revenue growth reached 44 per cent year-on-year on a like-for-like basis (LFL), excluding effect from M&A activity. Maritime, Digital, and Ports Clusters were the key growth drivers with 208 per cent, 26 per cent, and 22 per cent year-on-year, respectively.
AD Ports Group Q2 2023 EBITDA rose by 29 per cent year-on-year to AED686 million, mainly driven by maritime, digital, and ports clusters as well as acquisitions (+13 per cent year-on-year on a LFL basis). Change in the revenue mix, lower share of profits from joint ventures and associates, and ramp-up/one-off costs associated with new businesses resulted in a normalisation of EBITDA margin to 33.3 per cent for the quarter versus 38.5 per cent in Q2 2022.
Total net profit increased by 3 per cent year-on-year to AED310 million in Q2 2023 as EBITDA growth was diluted by the increase in depreciation and amortisation charges, as well as finance costs associated with deployment of new assets with deferred revenue effect.
The group’s net operating cash flows continued to improve to AED508 million in Q2 2023, while capital expenditures (CapEx) reached AED1.8 billion as per plan.
Net debt to EBITDA ratio stood at 3.5x at the end of Q2 2023, but was distorted by completion of the Noatum acquisition on 30 June 2023, which was fully funded through debt in Q2, but with profit and loss in effect only from Q3 onwards.
The Maritime Cluster reported an impressive revenue growth of 208 per cent year-on-year to AED1.20 billion, primarily driven by the feedering (container and bulk) and offshore logistics and services business segments (+161 per cent year-on-year on LFL basis).
The Economic Cities & Free Zones Cluster (EC&FZ Cluster) reported a 10 per cent year-on-year decline to AED441 million, mainly due to temporary lower utilisation of Razeen staff accommodation as it ceased to be used as COVID-19 isolation and quarantine facilities. This decline was partly offset by the consolidation of Eskan Al Jamae (EAJ) since the beginning of the year and higher revenues from land leases. An additional 0.7 sq km (net) of new land leases were added in Q2 2023, taking the total land leased under the EC&FZ Cluster to 66.1 sq km.
The Ports Cluster reported Q2 2023 revenue growth of 22 per cent year-on-year (+15 per cent year-on-year on a LFL basis), with container volumes growing 10 per cent year-on-year to 1.21 million twenty-foot equivalent units (TEUs). The cluster also delivered 64 per cent year-on-year growth in roll on-roll off (Ro-Ro) volumes, 152 per cent year-on-year growth in the number cruise passengers, and 40 per cent year-on-year growth in general cargo volumes. In June, AD Ports Group secured a 50-year concession agreement for the existing container terminal operations of the Port of Karachi, which resulted in an immediate earnings contribution.
The Logistics Cluster contributed AED127 million to AD Ports Group’s revenue in Q2 2023, representing a 3 per cent year-on-year increase as 8 per cent year-on-year growth in polymer volumes was partly offset by cessation of COVID-19 vaccine business.
The Digital Cluster reported a 26 per cent year-on-year increase to AED117 million, supported by the newly acquired TTEK (completed on 22 May), which develops and deploys border control solutions and customs systems, and strong performance of ATLP-related services. The Cluster’s revenue growth reached 22 per cent year-on-year on a LFL basis. Going forward, AD Ports Group’s revenue mix is likely to be more balanced across four of its five Clusters with the recently completed acquisition of Noatum, a global integrated logistics services provider with a presence in 26 countries across five continents. The Spain-headquartered company generated revenue and EBITDA of AED5.69 billion and AED433 million in the last 12 months as at 30 June 2023, respectively, performing in line with expectations since the transaction was announced.
Based on 2023’s first six months financial performance for both AD Ports Group and Noatum, the latter accounts for more than 50 per cent of AD Ports Group’s revenue and 13 per cent of its EBITDA.
Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO of AD Ports Group, said: "I am delighted with our strong financial performance for Q2 2023. With a remarkable 66 per cent year-on-year revenue growth to AED2.1 billion, we are successfully executing our diversification strategy and leveraging synergies from our recent acquisitions, paving the way for continued growth and value creation for our stakeholders, driven by the support of our wise leadership."
Martin Aarup, Group Chief Financial Officer of AD Ports Group, said: “AD Ports Group's solid financial performance in Q2 2023, evidenced by a 29 per cent year-on-year increase in EBITDA to AED686 million, showcases our resilient growth journey driven by our expanded service offering and geographic diversification. At the same time, we continue to invest large amounts of CapEx, AED1.8 billion in Q2 2023, which will drive our future growth."
In addition to the completion of the Noatum acquisition, key business developments that took place in Q2 2023 included.
In June 2023, AD Ports Group announced a concession agreement with Karachi Port Trust (KPT), the Pakistani federal government agency that oversees the operations of the Port of Karachi. Under the terms of the 50-year concession agreement, a UAE-based company has been formed to manage, operate and develop the Karachi Gateway Terminal Limited (KGTL), berths 6-9 at Karachi Port’s East Wharf. The terminal’s revenues are all dollarised with no foreign exchange exposure to the Pakistani Rupee. Over the past five years, the terminal has been generating revenue of around AED200 million and EBITDA of around AED110 million annually.
An additional announcement in June included the signing of a 30-year concession agreement with the Government of the Republic of the Congo for managing and operating the multipurpose New East Mole Terminal at Pointe-Noire. AD Ports Group will invest more than AED1.84 billion over the lifetime of the concession, with around AED810 million allocated for phase 1, which is expected to be completed over the next 30 months.
AD Ports Group and Premier Marine Engineering Services LLC (Premier Marine) formed a new joint venture, SAFEEN Drydocks in June 2023. The joint venture is structured as a 51 per cent ownership by AD Ports Group and 49 per cent by Premier Marine. The hub of SAFEEN Drydocks’ operations will be located at Khalifa Port and will encompass a 45,000 sqm shipyard and repair facility, 350m quay wall for vessel afloat repair, and a floating dry dock for vessel maintenance and refurbishment.
The group also signed a 25-year agreement with Singapore-based Crystal Offshore, a recognised one-stop logistics solution provider to the marine and offshore industry. Under the terms of the agreement, a 20,000sqm plot of land and an associated quay wall in Khalifa Port will be allocated for Crystal Offshore to construct a base, featuring office facilities and fabrication workshops to provide advanced repairs and refits to jack-up rigs as well as marine and offshore vessels.
Khalifa Port, AD Ports Group flagship deep-water port was ranked the third-most efficient container port globally in the recently published Container Port Performance Index (CPPI) developed by the World Bank and S&P Global Market Intelligence.
In July 2023, Khalifa Economic Zones Abu Dhabi – KEZAD Group, the integrated trade, logistics and industrial hub of Abu Dhabi, and Al Jazeera Steel Products Co held the ground-breaking ceremony of the region’s first rolling mill with rail production capability in Abu Dhabi on 12 July 2023. The state-of-the-art, innovative and cutting-edge 450,000 tonnes per annum medium section mill will cover an area of 210,000sqm in KEZAD and will cater to the growing customer demand for steel products, as well as other growing requirements for products produced efficiently through KEZAD.
To view AD Ports Group’s financial statements, visit: adportsgroup.com/en/investors.