Abu Dhabi, UAE–AD Ports has reported a 20% jump in net profit to $111 million in Q3 2023, in line with EBITDA performance.
Its revenue jumped 189% YoY to $1.15 billion, which included the effect of MA activity and notably Noatum’s Logistics, Maritime, and Ports businesses. Revenue growth reached 113% YoY on a LFL basis, excluding effect from MA activity.
AD Ports Group Q3 2023 EBITDA rose by 28% YoY to $207 million, largely supported by the acquisition of Noatum and Karachi Gateway Terminal (+2% YoY on a LFL basis). Higher contributions from the relatively lower-margin Maritime Shipping and Logistics businesses resulted in further EBITDA margin dilution to 17.9% for the quarter vs. 40.5% in Q3 2022.
The Group maintains its EBITDA Margin guidance of 25-30% in the medium term as it expects the revenue mix to continue to rebalance while it continues to invest heavily, both organically and inorganically, in the foreseeable future. The Group also expects its operating profitability to rebalance as it gradually delivers on extracting synergies from densifying our vertically integrated ecosystem and scaling up operations.
The Maritime Shipping Cluster remained the Group’s biggest revenue contributor and has become the largest EBITDA contributor too, accounting for 56% and 33% in Q3 2023, respectively, benefiting from Noatum Maritime contribution and opportunistic vessel trading activities.
The Group’s negative Net Operating Cash Flows of $158 million were impacted by a temporary deterioration in working capital in relation with the vessel trading activities. The Group expects Net Operating Cash Flows to recoup this negative performance in Q4 2023 when the associated cash collection takes place.
Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO, AD Ports Group, said: “AD Ports Group has achieved remarkable growth in Q3 2023, underpinned by our strategic MA activities and our strong relationships with diverse local economies, looking beyond traditional terminal operations and toward collaborations.”
He added: “The robust top-line growth not only reflects our efforts to develop new trade routes, strengthen service offerings to our key trading partners, and invest in our key customers in global supply chains, but also stands as a clear indicator of our effective diversification strategy and operational excellence. It is clear that, despite geopolitical headwinds and challenges presented by shifting global supply chains, with the support of our wise leadership, our ambitious global growth trajectory is reshaping the industry landscape and delivering superior value to our stakeholders.”
Martin Aarup, Group Chief Financial Officer, AD Ports Group, said: “Our financial results for Q3 2023 underscore the strength and resilience of AD Ports Group’s diversified business model, buoyed by a substantial increase in YoY revenue. Despite the EBITDA margin dilution due to the lower margin of Maritime Shipping and Logistics businesses, our focused approach on vertical integration and operational scaling is yielding positive results. The temporary dip in Net Operating Cash Flows is related to our strategic investments and vessel trading activities and we anticipate a normalisation in our leverage and a rebound in cash flows in Q4.”
The Maritime Shipping Cluster reported another impressive performance, with revenue growth of 264% YoY to $664 million (+232% YoY on LFL basis), primarily driven by opportunistic vessel trading activities in the shipping segment, and by the marine services segment, which included the consolidation of Noatum’s Maritime business. Feedering container volumes continued to be strong, with +30% YoY, driven by capacity increases.
The Ports Cluster reported Q3 2023 revenue growth of 71% YoY to $133 million (+8% YoY on a LFL basis). Operational KPIs were once again supportive, with container volumes growing 19% YoY (+17% YoY on a LFL basis) to 1.36 million TEUs (twenty-foot equivalent units) on the back of both higher capacity (with KGTL and Noatum) and improved overall container utilisation to 56%, up from 54% in the base quarter. Ro-Ro volumes soared 651% (+49% YoY on a LFL basis) while general cargo volumes increased 25% (+6% YoY on LFL basis).
The Logistics Cluster transformed to be a global player following the completion of the Noatum acquisition, with revenue increasing more than fivefold to AED 852 million (+4% YoY on a LFL basis). In terms of operational KPIs, Ocean Freight volumes were up 5% YoY, Air Freight volumes declined 28% YoY, and Polymers volumes grew 10% YoY.
In early October, Noatum announced the acquisition of Sesé Auto Logistics for a total purchase consideration (Enterprise Value – EV) of EUR 81 million. The transaction is expected to be completed by Q1 2024, subject to regulatory approvals.
Sesé Auto Logistics is engaged in road and rail transport logistics of light and heavy vehicles, operating from five main European countries, namely Spain, Germany, Poland Czech Republic, and Hungary, with a fleet of over 200 trucks that cover more than 30 million kilometres annually across Europe. The company serves leading Original Equipment Manufacturers (OEMs), including Renault, Stellantis, Mazda, Daimler, BMW, PSA and MAN, among others.
The acquisition of Sesé Auto Logistics is a perfect illustration of AD Ports Group’s vertical integration strategy, aiming at offering a comprehensive solution in the key industries and geographies it focuses on, including the European automotive industry. This acquisition will allow Noatum Automotive to cover the entire logistics value chain, from transport to distribution and final delivery of vehicles to customers.
It will also generate significant synergies with Noatum’s port terminals business in Spain, offering an integrated logistics solution that will reinforce Noatum Automotive’s services for OEMs and other stakeholders and thus allow to capture a bigger share of their wallet and a higher value of their supply chain requirements.
Last week, AD Ports Group acquired 10 offshore vessels for around AED 735 million (USD 200 million), boosting its offshore subsea capabilities in the Middle East and Southeast Asia by around 20%. All 10 vessels are expected to be delivered in Q4 2023 with financial consolidation taking place from Q1 2024 onwards.
AD Ports Group will take over well-established contracts with blue chip clients in the OG industry, National Oil Companies, and International Oil Companies in the Middle East and Southeast Asia.
The transaction supports AD Ports Group’s strategy to continue to balance its portfolio of Maritime businesses with assets and services exposed to different market forces and cycles, thereby limiting its performance volatility, amidst forecasts of an upward trend in the offshore OG market over the medium-long term.
As for GFS acquisition, AD Ports Group still expects to close the transaction by the end of the year, with financial consolidation taking place from Q1 2024 onwards.