AD Ports third-quarter net profit jumps 73% on Hormuz impact mitigation efforts

AD Ports Group posted a 73 per cent surge in its third-quarter net income as revenue climbed on push to mitigate the effect of the closure of the Strait of Hormuz.

Net profit attributable to the owners of the company for three-month period to the end of the September rose to Dh767 million ($209 million), the Abu Dhabi-based global ports and free zones operator said on Wednesday in a statement to the Abu Dhabi Securities Exchange, where its shares trade.

The sharp increase in the quarterly earnings was primarily driven by the company’s push to further consolidated “alternative multimodal trade routes and operations” across the UAE to strengthen supply chain resilience.

The move, AD Ports said, helped to minimise the effect of Strait of Hormuz traffic disruptions on its customers in the UAE and the broader Gulf region.

“Continuity measures implemented since March include the rerouting of cargo operations and feeder shipping services to Fujairah Terminals and Khor Fakkan Port,” the company said. They also include the “deployment of new land and air bridges, and the establishment of additional warehousing and storage facilities”.

Operational flexibility and agility helped AD Ports to “mitigate the negative effects of regional disruptions on UAE operations, especially in the shipping business”, it added.

Revenue surge

Revenue for the reporting period surged to almost Dh8 billion, a 48 per cent year-on-year increase, driven by “double-digit top-line growth across the four core business clusters”, the company said.

A sharp quarter-on-quarter rise in the company’s ports cluster, as well as strong gains in maritime, shipping and logistics, as well as its economic cities and free zones businesses also drove revenue growth.

“In one of the most challenging periods in its 20-year history, AD Ports Group achieved record results during Q3, a testimony to the group’s operational resilience … which overcame macroeconomic and geopolitical uncertainty to reach new levels of income and revenue growth,” said group chief executive Afif Al Yafei, who took charge of the company last week.

Cluster performance

The Strait of Hormuz, a key energy shipping route and a vital artery for global commerce, has been effectively shut since the start of the US-Iran war on February 28. Despite a lull in the all-out war, efforts to reopen the strait for commercial vessel traffic have failed. A deal between the US and Iran remains elusive, which has forced ports, shipping and logistics operators such AD Ports to explore alternative export routes.

Despite regional challenges, the company's ports business rebounded, with the quarterly UAE container throughput jumping 30 per cent from the second quarter. On an annual basis, it still remained 57 per cent lower.

Ports cluster third-quarter revenue, which accounted for 10 per cent of the total, rose 12 per cent year-on-year to Dh798 million.

Revenue for its economic cities and free zones cluster rose 15 per cent annually to Dh690 million, accounting for 8 per cent of group's revenue. Maritime and shipping cluster revenue soared 56 per cent to Dh4.74 billion, about 58 per cent of the total.

The company’s logistics revenue rose 76 per cent to Dh1.96 billion, 24 per cent of the group’s total quarterly revenue, it said.

AD Ports Group, which operates 40 terminals in the UAE, has a presence in 50 markets globally. The company is transiting from a publicly-traded firm to a private enterprise and in the process of delisting from the ADX.

Abu Dhabi sovereign investment vehicle L’imad in September met all necessary requirements to proceed with its voluntary cash offer to acquire up to 100 per cent of the ports company.