AD Ports Group, an enabler of integrated trade, transport and logistics solutions, today reported record levels of revenue and profit in Q3 2024 of AED 4.66 billion and AED 445 million, respectively, driven by strong growth across its core businesses.

Container Shipping Market Update and Outlook

• The industry-wide disruptions since December 2023, forcing vessels on the main East-West shipping lane to divert and take longer routes around the Cape of Good Hope, are likely to persist in the short-term.
• Geopolitical tensions in the Middle East, which arguably have been deteriorating since the beginning of the year, have led to continued attacks on ships in the Red Sea / Gulf of Aden, which in turn have resulted in continued global supply chain disruptions.
• Visibility on a normalisation of the situation is still poor.
• Although we are seeing more operators returning to the Red Sea, the resumption of full-scale operations transiting through the Suez Canal is not yet on the horizon. Shipping giants Maersk, Hapag-Lloyd and COSCO have all recently confirmed they will continue to sail around the Cape of Good Hope up until the end of 2024 and into 2025.
• Rates softened in September and October but the following upcoming events could confirm the renewed recent strength: 1) Trump’s win of the US presidential election is likely to lead to US tariff hikes triggering cargo front-loading; 2) re-stocking ahead of next year’s Lunar New Year break, which will start 11 days earlier at the end of January; and 3) fears of a potential re-emergence of US East Coast port strike (mid-Jan 2025), with negotiations on new labour contracts starting later this month. The global economic situation has also been slightly better than expected so far this year and regional macro remains solid supporting demand and rates for AD Ports Group.
• Despite newbuild container ship deliveries being in line with the expected 2.9 million TEUs for this year (+5.7% in global containership fleet during H1 2024) the Red Sea crisis has seen all the new ships being fully employed – vessels rerouting to avoid the Red Sea is estimated to require 10% to 20% additional industry capacity. Fleet renewal is also a way for shipping companies to keep supply-demand dynamics in check.

• Higher warehouse and KEZAD Communities utilization rates YoY despite adding capacity in both business segments in Q3 2024 shows strong demand for these services and were key drivers for the 16% YoY quarterly revenue growth.
• With 0.7 sq km of additional land leases (net) signed during Q3 2024 (2.7 sq km in 9M 2024), AD Ports Group is on track to meet its annual guidance of 3.5-4.0 sq km of land lease net additions.
• Key new leases were in the building materials, oil & gas, and energy sectors.
• Strong top line performance also translated into 10% YoY EBITDA growth, although EBITDA margin has not yet normalised to historical levels of mid-60s due to evolving business mix.

• Revenue in the Ports Cluster grew 24% YoY in Q3 2024 and 18% YoY on a LFL basis adjusted for the contribution from Karachi Gateway Multipurpose Terminal (KGTML), which has been consolidated since 1st February 2024.
• The strong revenue growth for the cluster was led by strong performance in General Cargo (+42% YoY, driven by revenue mix in the UAE and KGTML in Pakistan), Container Concession fees in the UAE (+49% YoY, including fixed concession fees from CMA Terminals Khalifa Port from July), and international container operations (Spain and Pakistan).
• 22% YoY growth in container throughout at the flagship Khalifa Port in the UAE, which accounted for 87% of total container throughout for the quarter, translating into an all-time high utilization of 76%. Overall container capacity utilization reached 68% for the quarter vs. 56% in Q3 2023.
• The current Red Sea crisis continued to support the quarterly Ro-Ro volumes in Khalifa Port (+53% YoY) while subdued demand in Europe and EV-related trade tensions with China has led to some softening in Ro-Ro volumes in Spain (-11% YoY). Overall, Ro-Ro volumes registered a steady 2% YoY growth for the quarter.
• With strong top line performance and the increasing contribution of container concession fees, EBITDA margin trended back close to the 50% mark.

• Headline revenue for the Maritime & Shipping Cluster declined 11% YoY in Q3 2024, but normalised for the vessel trading activities that took place in Q3 2023, it surged 96% YoY, driven by all key business segments (+148% YoY for Shipping, +85% YoY for Offshore & Subsea, and +23% for Marine Services). On a LFL basis, adjusted for the vessel trading revenue and inorganic effect of GFS, revenue growth remained strong at 21% YoY.
• Container shipping volumes increased more than five-fold YoY to 687K TEUs for the quarter driven by GFS acquisition and higher utilisation.
• The addition of 10 offshore vessels from E-NAV in Q4 2023 was the main reason for the strong revenue performance for the Offshore & Subsea business segment.
• Strong revenue growth in Marine Services was the result of the new dry-docking business coupled with increased activity and traffic at Khalifa Port.
• Favourable shipping market conditions continued to drive up the Cluster’s profitability, with EBITDA margin improving further to 28% in Q3 2024.
Source: AD Ports Group