AD Ports Group today announced its financial results for the second quarter of 2023, reporting revenue growth of 66% YoY 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 M&A. Revenue growth reached 44% YoY 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%, 26%, and 22% YoY, respectively.
AD Ports Group Q2 2023 EBITDA rose by 29% YoY to AED 686 million, mainly driven by Maritime, Digital, and Ports Clusters as well as acquisitions (+13% YoY on a LFL basis). Change in the revenue mix, lower share of profits from JVs and associates, and ramp-up/one-off costs associated with new businesses resulted in a normalisation of EBITDA margin to 33.3% for the quarter vs. 38.5% in Q2 2022.
Total Net Profit increased by 3% YoY to AED 310 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 AED 508 million in Q2 2023 while Capital Expenditures (CapEx) reached AED 1.8 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 P&L effect only from Q3 onwards.
The Maritime Cluster reported an impressive revenue growth of 208% YoY to AED 1,160 million, primarily driven by the feedering (container and bulk) and offshore logistics and services business segments (+161% YoY on LFL basis).
The Economic Cities & Free Zones Cluster reported a 10% YoY decline to AED 441 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% YoY (+15% YoY on a LFL basis), with container volumes growing 10% YoY to 1.21 million TEUs (twenty-foot equivalent units). The Cluster also delivered 64% YoY growth in Ro-Ro volumes, 152% YoY growth in the number cruise passengers, and 40% YoY 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 immediate earnings contribution.
The Logistics Cluster contributed AED 127 million to the Group’s revenue in Q2 2023, representing a 3% YoY increase as 8% YoY growth in polymer volumes was partly offset by cessation of COVID-19 vaccine business.
The Digital Cluster reported a 26% YoY increase to AED 117 million, supported by the newly acquired TTEK (completed on 22nd 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% YoY 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 AED 5.69 billion (EUR 1.39 billion) and AED 433 million (EUR 106 million) in the last twelve months as at 30th 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 over 50% of AD Ports Group’s revenue and 13% of its EBITDA.
Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO, AD Ports Group, said: "I am delighted with our strong financial performance for Q2 2023. With a remarkable 66% YoY revenue growth to AED 2.1 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, AD Ports Group, said: “AD Ports Group's solid financial performance in Q2 2023, evidenced by a 29% YoY increase in EBITDA to AED 686 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, AED 1.8 billion in Q2 2023, which will drive our future growth."
Q2 2023 Key Highlights
In addition to the completion of the Noatum acquisition these are the key business developments that took place in Q2 2023.
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 AED ~200 million (USD 55 million) and EBITDA of around AED ~110 million (USD 30 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 AED ~1.84 billion (USD 500 million) over the lifetime of the concession, with around AED ~810 million (USD 220 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% ownership by AD Ports Group and 49% by Premier Marine. The hub of SAFEEN Drydocks’ operations will be located at Khalifa Port and will encompass a 45 000 m2 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 & Offshore industry. Under the terms of the agreement, a 20 000 m2 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 3rd 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 12th July 2023. The state-of-the-art, innovative and cutting-edge 450 000 tpy medium section mill will cover an area of 210 000 m2 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.
AD Ports Group’s financial statements are available here