AD Ports Group Delivers 66% Year-on-Year Revenue Growth in Q2 2023

AD Ports Group has announced its financial results for the second quarter of 2023, reporting revenue growth of 66% YoY to US$571 million, 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 US$187 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 US$85 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. 

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The Group’s Net Operating Cash Flows continued to improve to US$138 million in Q2 2023 while Capital Expenditures (CapEx) reached US$490 million 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 US$316 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 US$120 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 US$35 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 US$32 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 US$1.55 billion and US$118 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 US$187 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, US$490 million 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.

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 US$500 million over the lifetime of the concession, with around US$ 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 Group also signed a 25-year agreement with Singapore based Crystal Offshore, a recognised one-stop logistics solution provider to the Marine & Offshore industry.

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.

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