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AD Ports Group Reports Record Net Profit in Q3 2022
AD Ports Group announced its financial results for the third quarter of 2022.
The Group’s revenue grew 53% YoY to AED 1,466 million in Q3 2022 (+35% YoY growth to AED 3,755 million for 9M 2022), driven by strong growth in its Maritime Cluster and a robust performance of its Economic Cities & Free Zones (EC&FZ) Cluster. Ports Cluster revenue grew 18% YoY on a like-for-like basis when adjusted for the positive effect of a one-off sand supply contract in 2021.
EBITDA increased 52% YoY to AED 594 million in Q3 2022 (+42% YoY growth to AED 1,650 million for 9M 2022), implying an EBITDA margin of 40.5% in Q3 2022 and 43.9% for 9M 2022. The Group’s EBITDA performance should continue to be supported by higher operating leverage in the Ports and EC&FZ Clusters going forward.
Net Profit soared 77% YoY to reach AED 334 million in Q3 2022 (+58% YoY growth to AED 941 million for 9M 2022). Earnings per share increased 27% YoY to 0.19 for 9M 2022.
AD Ports Group continued to press ahead with its ambitious organic revenue generating CapEx programme, with spending of AED 1.6 billion in Q3 2022 and AED 4.2 billion for 9M 2022.
Operating Cash Flow amounted to AED 1.3 billion for 9M 2022, implying a cash conversion of 76% while Free Cash Flow remained negative at AED -2.6 billion due to the large ongoing revenue generating growth CapEx investments. AD Ports Group maintains a solid financial position and robust balance sheet, with significant capital resources available for both organic and inorganic growth.
Operationally, Ports Cluster container volumes grew 31% YoY in Q3 2022 (+28% YoY for 9M 2022), driven by increased capacity after the expansion of ADT and CSP Abu Dhabi Terminals in 2021.
One of the key highlights of the period was the announcement of the acquisition of an 80% equity stake in Dubai-based Global Feeder Shipping (GFS), a global container shipping company, for AED 2.9 billion (USD 800 million), implying a 100% Enterprise Value of AED 3.7 billion (USD 1.0 billion). GFS is the third largest feeder shipping business globally, with operated capacity of 72,500 TEUs, a total of 26 vessels, and 9,000 owned and 31,000 operated containers across its feeder and NVOCC businesses. It operates a comprehensive service network of 20 services across the GCC, Red Sea, Indian Subcontinent and Southeast Asia.
Upon completion, the acquisition, which is the company’s largest by AD Ports Group to date, is set to position AD Ports Group as the largest pure feeder operator in the region and the third largest globally by container capacity, which will be close to 100,000 TEUs. GFS provides a complementary asset base and portfolio of services that will boost AD Ports Group’s regional and global footprint.
The company expects the GFS acquisition to be c.60% EPS accretive on a full-year basis in 2023.
In September, AD Ports Group also completed the acquisition of a 70% stake in International Associated Cargo Carrier (IACC) in Egypt, which fully owns Transmar and TCI, for an enterprise value of AED 514 million (USD 140 million).
The transformative impact of the company’s acquisitions strategy can be seen most clearly in the enhanced performance of the Group’s Maritime Cluster, which saw a 241% YoY increase in revenue to AED 1.3 billion in the first nine months of the year. This was in part driven by increased activity in new business segments and service offerings, including feedering, chartering, transshipment, and offshore services, and accelerated by the contribution of the recent acquisitions, including Divetech, ASCL, SAFEEN Surveys and Subsea Services, and Transmar, which accounted for 27% of the total 9M 2022 Maritime Cluster revenue.
Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO, AD Ports Group, said: “These remarkable results demonstrate the effectiveness and impact of our ambitious growth strategy, as we seek new opportunities even in challenging global market conditions. As ever, we are grateful to our wise leadership for their steadfast support for our initiatives at home in the UAE and around the world.
We have pursued joint ventures and acquisitions that have built supply chain density along major routes, accelerating trade and building resilience for customers around the world. These new ventures have played a key role in expanding our service offering, enabling us to support customers at every stage of their business journey, and delivering exponential growth in our maritime business in particular.”
Martin Aarup, Group Chief Financial Officer, AD Ports Group, said: “We have a strong balance sheet, a firm bedrock of long-term recurring revenue for our Ports and EC&FZ businesses, and we see a positive correlation between the fundamentals of the Abu Dhabi economy and the success of our business. Our alignment with the emirate’s long-term industrial and manufacturing strategies, the country’s National Food Security Strategy 2051, and the long-term strategy to diversify the economy and boost non-oil exports all auger well for our business in the future.”
Ross Thompson, Group Chief Strategy and Growth Officer, AD Ports Group, said: “Globally, we can see signs of economic recession and a slowing of international trade, but our operations are thriving in markets and along routes that still show tremendous capacity for growth, particularly in the MENA region, along the Red Sea coast, and the Indian subcontinent.
We are successfully executing a three-stage growth strategy with clear objectives and outcomes, consolidating our position as the leader in logistics and trade services in Abu Dhabi and the UAE; executing customer-led regional expansion along critical trade routes and through focused service launches; and expanding globally across major maritime and inland supply chains. We can offer confident medium-term visibility that will see positive strong revenue, EBITDA and profit growth for the next five years.”