AD Ports Group announced significant growth in its Q1 2023 financial results, with revenue reaching AED 1,817M, reflecting a YoY increase of 73%. The company attributed this impressive growth to the strong performance of its Maritime, Economic Cities & Free Zones, and Ports Clusters, as well as recent acquisitions completed in 2022 and Q1 2023. Notable acquisitions included Transmar and TCI in Egypt, as well as Divetech, ASCL, SAFEEN Subsea, and Al Eskan Al Jamae (EAJ) in Abu Dhabi.
Furthermore, the Group reported a 33% YoY increase in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which reached AED 699M in Q1 2023. This growth was primarily driven by the Maritime and Ports Clusters, as well as the impact of recent acquisitions. The EBITDA margin for the quarter stood at 38.5%, in line with the short-term guidance of 35-40% previously communicated to the market, according to WAM.
AD Ports Group also achieved substantial growth in net profit, which soared 18% YoY to AED 363M in Q1 2023.
In Q1 2023, AD Ports Group witnessed significant revenue growth across various clusters. The Maritime Cluster experienced a remarkable 259% YoY increase, generating AED 915M in revenue. This growth was attributed to capacity expansions, a broader range of services offered, and increased activity in new business segments. Approximately 30% of the Maritime Cluster’s Q1 2023 revenue was contributed by recently acquired companies such as Divetech, ASCL, Safeen Subsea, and Transmar. Key drivers of growth within the Maritime Cluster were marine services, feeder (container and bulk) operations, and offshore services.
The Economic Cities & Free Zones Cluster achieved a 13% YoY growth, generating AED 429M in revenue during Q1 2023. This growth was primarily driven by previously signed leases, higher revenues from utilities, and the merger with EAJ (Al Eskan Al Jamae), which contributed around AED 73M during the full Q1 period. Furthermore, the Economic Cities & Free Zones Cluster leased an additional 1.4 sq km of land, remaining on track to meet the annual guidance of 3.5-4.0 sq km, and reported a 46% YoY increase in warehouse leases.
The Ports Cluster witnessed a 24% YoY revenue growth, amounting to AED 314M in Q1 2023. Container volumes within the Ports Cluster grew by 18% YoY during this period, driven by the gradual recovery from the COVID-19 pandemic and supply chain disruptions. Additionally, higher container utilization rates (51% in Q1 2023 compared to 43% in Q1 2022) were achieved as partner shipping lines progressively redirected their regional volumes to Khalifa Port in accordance with contractual obligations. The Ports Cluster also experienced significant growth in Ro-Ro volumes (32% YoY), cruise passengers (361% YoY), and general cargo volumes (40% YoY).
The Logistics Cluster contributed AED 139M to the Group’s revenue in Q1 2023, indicating a slight decline of 3% YoY. This decrease was influenced by the temporary maintenance shutdown of a strategic customer’s production plant and the conclusion of the COVID-19 vaccine business.
The Digital Cluster contributed AED 101M to the Group’s revenue in Q1 2023, showing relative stability. However, lower demand for internal IT services had an impact on its performance.
AD Ports Group continued to execute its revenue-generating Capital Expenditure (CapEx) program as planned, investing AED 1.02B in Q1 2023 to diversify its income streams.
Regarding the balance sheet, AD Ports Group maintained a healthy financial position and leverage, with a Net Debt to EBITDA ratio of 2.1x by the end of Q1 2023. The company also had limited short-term debt servicing obligations.
In Q1 2023, AD Ports Group demonstrated a significant increase in Net Operating Cash Flows, generating AED 335M, reflecting a substantial YoY growth. However, the implementation of the planned Capital Expenditure (CapEx) program, which is front-loaded and extensive, continued to impact Free Cash Flows as anticipated. As a result, the Group reported a negative Free Cash Flow of AED 544M during Q1 2023.
Among the notable developments in the early part of the year, AD Ports Group announced the acquisition of 100% ownership of TTEK, a company specializing in border control solutions and customs systems. Additionally, the merger with EAJ in Abu Dhabi was successfully completed, marking another significant milestone for the Group.
Moving forward, AD Ports Group is now focusing on finalizing the previously announced acquisitions. This includes the acquisition of 100% ownership of Noatum, a logistics services provider with a presence in 26 countries across five continents. Furthermore, the Group aims to secure an 80% equity stake in Global Feeder Shipping (GFS), a Dubai-based global container shipping company. These acquisitions are set to expand AD Ports Group’s global presence and enhance its logistics and freight forwarding operations on an international scale. With these additions, AD Ports Group is poised to become the largest pure feeder operator in the region and the third largest globally in terms of container capacity, reaching nearly 100,000 TEUs. The Group anticipates completing the acquisition of Noatum no later than Q2 2023 and the acquisition of GFS no later than Q3 2023.
Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO, AD Ports Group, said: “I am thrilled to announce that our successful momentum from 2022 has carried through the first quarter of 2023, with strong financial and operational results. Our investment in organic growth is bearing fruit, and the strategic M&A activity we undertook has provided a further boost to our growth.”
The Group’s performance across its five clusters demonstrates our strong business resilience with over 70% of Q1 2023 revenue being long-term, sticky and recurring business.
As we press ahead with our 5-year CapEx plan (2023-27) of around AED 15 billion, and further expand our capabilities and market presence with the support of our wise leadership, we expect our growth trajectory to continue, especially since the macro outlook for the UAE and the region remains positive.”
Martin Aarup, Group Chief Financial Officer, AD Ports Group, said: “Our Q1 2023 financial results were robust with strong top-line growth and a stable, predictable revenue base. This solid performance combined with good visibility comes from our unique business model in our Ports and Economic Cities & Free Zones Clusters, coupled with long-term contracts, partners, and leases in the Maritime and Logistics Clusters. In addition, our strong balance sheet offers further flexibility for both organic and inorganic growth, enabling us to continue to consider business growth opportunities in the current challenging environment while maintaining our investment-grade credit rating. We are excited about the opportunities ahead and remain committed to delivering increasing value to our shareholders.”
