AD Ports Group delivers record Q3 2023 results

AD Ports Group on Tuesday announced that third-quarter revenue grew 189 per cent year-on-year to Dh4.24 billion the third quarter of 2023, which included the effect of M&A activity and notably Noatum’s Logistics, Maritime, and Ports businesses.
Revenue growth reached 113 per cent year-on-year on a like-for-like (LFL) basis, excluding effect from M&A activity. Four of the five clusters — logistics, maritime & shipping, ports, and EC&FZ — were key growth drivers of the top line, with 546 per cent, 264 per cent, 71 per cent, and 20 per cent year-on-year performance, respectively. AD Ports Group Q3 2023 Ebitda rose by 28 per cent year-on-year to Dh759 million, largely supported by the acquisition of Noatum and Karachi Gateway Terminal (+2 per cent year-on-year 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 per cent for the quarter vs. 40.5 per cent in Q3 2022. The group said it maintains its Ebitda margin guidance of 25-30 per cent 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 per cent and 33 per cent in Q3 2023, respectively, benefiting from Noatum Maritime contribution and opportunistic vessel trading activities.
Total net profit surged by 20 per cent year-on-year to Dh403 million in Q3 2023, in line with Ebitda performance. The group’s negative net operating cash flows of Dh579 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. The group’s capital Expenditures (CapEx) reached Dh800 million in Q3 2023, putting the total year-to-date outlay at Dh3.65 billion, in line with our front-loaded Dh15 billion capex programme between 2023 and 2027 (five-year period).
Net Debt to Ebitda ratio stood at 4.0x at the end of Q3 2023 for the exact same reasons mentioned above to explain the Net Operating Cash Flows performance, i.e. the temporary impact from vessel trading activities. The Group expects leverage to normalise in the last quarter of the year.
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 M&A activities and our strong relationships with diverse local economies, looking beyond traditional terminal operations and toward collaborations. 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 year-on-year 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. Our continued focussed investments, both organically and inorganically, align with our long-term vision to enhance shareholder value and our commitment to the diversification of the UAE’s economy. These strategic alignments, coupled with our prudent financial management, position us exceptionally well for sustained success and profitability in the evolving economic landscape.”