Despite the global challenges that continue to disrupt the shipping industry, AD Ports Group’s innovative and integrated business approach, as well as its ability to forge partnerships and revenue stability helped it grow a record 35 percent year-on-year to AED1,242 million in Q2 2022.
Announcing its financial results for the quarter ending 30 June 2022, the group also said its YOY growth in the first half of 2022 was over 25 percent. The growth was driven mainly by the success of its Maritime and Economic Cities & Free Zones (EC&FZ) clusters.
Net Profit growth accelerated to 59 percent YoY reaching AED300 million in Q2 2022 (+49 percent YoY growth in H1 2022) despite higher depreciation charges and higher finance costs from the ongoing investment program and higher provisions for ECL (Expected Credit Loss).
Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO, said: “The momentum of our growth journey has accelerated throughout the first half of the year, and we anticipate continuing to deliver on our performance for the remainder of the year.
“The Group’s core businesses have continued to rebound from the severe supply chain disruptions of last year while our new ventures, enhanced service offering, and diversification strategy into synergistic new businesses have been yielding positive results.
“In Q2 2022, we continued to invest heavily in order to deliver future growth. Moreover, we have also benefitted from the macro picture in the Gulf region, and in the UAE in particular. Not only have oil prices been increasing sharply, which has accelerated the country’s economic growth, including the non-oil economy.”
The Ports Cluster Q2 2022 revenue performance was hampered by an unfavourable base effect from the one-off sand supply contract that ran from March until October 2021. However, on a like-for-like (LFL) basis, the Ports Cluster revenue grew by 20 percent YoY in Q2 2022.
The 22.32 percent stake in Aramex, which was transferred to AD Ports Group in January 2022, contributed AED12 million to EBITDA and Net Profit in Q2 2022 (AED23 million in H1 2022).
EBITDA increased 41 percent YoY to AED532 million in Q2 2022 (+37 percent YoY growth in H1 2022), with EBITDA margin improving by close to 200 bps to 42.8 percent. With the continued ramp-up of operations across all clusters, and barring one-off negative impacts, the Group’s EBITDA performance should continue to be supported by higher operating leverage going forward.
Consolidated capital expenditure during Q2 2022 reached AED1.6 billion (AED2.6 billion in H1 2022 vs. AED1.1 billion in H1 2021), with the three main recipients being the Maritime Cluster (vessel fleet expansion), the Ports Cluster (Khalifa Port expansion and Etihad Rail connectivity), and the Economic Cities & Free Zones Cluster (new warehouses, gas network expansion and infrastructure-related investments to unlock additional land).
Liquidity strategy
AD Ports Group maintains a robust capital structure with adequate liquidity and investment grade credit ratings to cater to its future growth. As of Q2 2002, the Group had total debt of AED3.6 billion in the form of 10-year bonds that were issued under an EMTN Programme in 2021 and a cash position of AED1.8 billion, translating into a net leverage of 0.9x.
The Group has a well-managed debt maturity profile with adequate liquidity lines. The USD1 billion syndicated revolving credit facility (RCF) with a consortium of local and international banks secured in 2021 remains unutilised. The strategy continues to be to utilise bonds as the predominant long-term funding vehicle with the RCF serving as a liquidity backstop.
New projects
In June this year, AD Ports Group reached an agreement with National Marine Dredging Company (NMDC) to launch a new joint venture, Safeen Surveys and Subsea Services. The new company will offer offshore surveys and subsea services, including commercial diving services and unmanned vessel inspections, in the UAE, the GCC, and some international markets.
The JV will also provide innovative solutions to meet the needs of offshore operations related to the oil and gas and renewable energy sectors.
In the same month, AD Ports Group also announced its first international acquisition in Egypt with the purchase of a 70 percent stake in International Associated Cargo Carrier (IACC). The company which fully owns Transmar International Shipping Company and Transcargo International (TCI) – a regional container shipping company that operates across the Middle East, Red Sea, Arabian Gulf and Eastern Coast of Africa and a terminal operator and stevedoring company, mainly operating out of the Adabiya Port, where it is the exclusive container operator.
In July 2022, AD Ports Group launched a joint venture with SEG, one of the largest oil and gas companies in Uzbekistan, to open new logistics and freight businesses and signed a Memorandum of Understanding to develop a food storage and distribution hub to enhance Uzbekistan’s food trade across global markets and drive Central Asian food security.
Ross Thompson, Group Chief Strategy and Growth Officer, said AD Ports Group was well positioned to continue its growth trajectory.
“Global markets are still turbulent with a high inflation environment, rising interest rates, geopolitical tensions as well as continued ramifications of the COVID-19 pandemic, including supply chain disruptions and supply shortages,” said Thompson.
“Therefore, pressure on global trade volumes is increasing with macroeconomic headwinds, lockdowns in China and a ‘cost of living crisis’ but has been largely offset by post COVID-19 pent-up demand for goods for the time being. As a result, global seaborne container trade volumes decreased around 2.5 percent in H1 2022, with full-year forecasts expected to finish higher at near 1 percent YoY growth.
“On the other hand, shipping rates remain at extraordinary levels and their outlook for the rest of the year remains positive, with continuing disruptions providing support despite trade headwinds.
In this challenging global context, our unique integrated business model, built upon a firm foundation of long-term contracted revenues, offers good revenue stability and visibility while our extensive investment programme, both organically and through acquisitions, provides a healthy growth platform.”
Follow us on
