Ports operator says Red Sea disruptions will continue to boost freight demand and rates
Aarti Nagraj Listen In EnglishListen in ArabicPowered by automated translation
Abu Dhabi Ports Group reported a drop in its fourth-quarter net profit mainly due to one-off charges, even as revenue during the period surged on strong maritime and shipping activity as well as recent acquisitions.
Net profit attributable to the owners of the company for the three-month period to the end of December fell to Dh91 million ($24.7 million) compared to Dh331 million during the same period last year, “primarily due to extraordinary one-off items”, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.
Revenue during the period more than doubled to Dh3.57 billion, driven by its maritime and shipping, ports, logistics and digital clusters as well as the impact of mergers and acquisitions.
In particular, the acquisition of Spanish logistics company Noatum for Dh2.5 million, which was completed on June 30, had a six-month impact, AD Ports said.
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“Despite strong topline and operating results, higher depreciation and amortisation charges, including amortisation of intangibles following the finalisation of the purchase price allocation process of recent acquisitions, as well as finance costs and tax weighed on total net profit performance,” it said.
Normalisation of interest rates going forward will also help narrow the gap between topline and bottomline growth, the company added.
AD Ports, which has a portfolio spanning 27 terminals, currently has a presence in more than 40 countries. It also operates more than 550 square kilometres of economic zones within Kezad Group in Abu Dhabi.
The company has been rapidly expanding its presence in recent years. Last month, its Spanish operations division Noatum Terminals fully acquired APM Terminals Castellon for €10 million ($11 million) in a move to strengthen operations in the western Mediterranean region.
In June, it signed a 50-year agreement with Karachi Port Trust, to boost infrastructure at the port in Pakistan’s commercial hub. This month, AD Ports, with Kaheel Terminals, also secured a second port concession agreement in Karachi for bulk and general cargo operations. The joint venture plans to invest approximately $75 million in the first two years, with a further investment of $100 million within five years.
In January, the company also announced a $3 million investment in three cruise terminals in Egypt as part of a 15-year concession agreement with the Red Sea Port Authority that covers the Safaga, Hurghada and Sharm El Sheikh ports.
Last year, AD Ports also signed a 30-year concession agreement with the government of the Republic of Congo to manage and operate a multipurpose New East Mole Terminal in the city of Pointe-Noire.
The company’s growth strategy focuses on “identifying and capitalising on emerging opportunities that align with our core competencies”, said Ross Thompson, group chief strategy and growth officer of AD Ports Group.
“Our recent expansions and partnerships and resulting strong financial results, are a direct reflection of this forward-thinking approach, aimed at accelerating our entry into new markets and segments.”
For the full year of 2023, AD Ports reported revenue growth of about 112 per cent to Dh11.68 billion, while net profit attributable to owners dropped 13 per cent to Dh1.09 billion.
General cargo volumes rose by 26 per cent annually to reach 40 million tonnes in 2023.
“Last year ended with renewed supply chain pressures caused by geopolitical tensions in the Middle East and the resulting Red Sea disruptions,” AD Ports said.
These disruptions have “significantly altered market perspectives” moving into 2024, with both volumes and prices increasing as a result.
“Persistent Red Sea disruptions are expected to continue to bolster both rates and demand for freight and might have a more pronounced knock-on effect on AD Ports Group operations,” the company said.
Updated: February 15, 2024, 5:31 AM
