Abu Dhabi's AD Ports Group reported an 86 per cent annual rise in its second quarter net profit as the company managed to diversify its trade routes away from the Strait of Hormuz that remains chocked amid the Iran war.
Net profit attributable to the owners of the company for the three-month period reached Dh596.7 million ($162.4 million), AD Ports said on Friday in a statement to the Abu Dhabi Securities Exchange, where its shares trade.
Revenue surged by 47 per cent year on year to Dh7.08 billion, driven by the “strong operational and financial performance of the maritime and shipping, economic cities and free zones, and logistics clusters”, AD Ports said.
The company's “record financial performance” in the second quarter came “despite operating through perhaps the most significant challenge in its 20-year history”, said Capt Mohamed Al Shamisi, managing director and group chief executive of AD Ports Group.
“Drawing on our predominantly landlord port business model, the diversification of trade routes through the UAE East Coast, and our growing international port footprint in Spain, Pakistan, Egypt and Angola, we successfully mitigated regional disruptions whilst sustaining our profit-enhancing global expansion,” he said.
Alternative routes
The Strait of Hormuz, a key trade and energy shipping route, has been effectively shut since the start of the Iran war on February 28. While there have been attempts to resume shipping through the waterway, a deal between the US and Iran remains elusive so far.
The closure has disrupted global shipping and logistics, with operators now focused on finding alternatives.
AD Ports said it continued to ramp-up alternative multimodal trade routes and operations under the UAE’s “national programme to strengthen supply chain resilience”, minimising the impact of the Hormuz closure.
Continuity measures implemented since March include the rerouting of cargo operations and feeder services to Fujairah Terminals and Khor Fakkan Port, located outside the Strait of Hormuz on the Gulf of Oman.
The company also boosted its regional feeder shipping services, connecting to ports in India, Pakistan and Oman, as well as ports in the Red Sea along the Upper Arabian Gulf.
In total, a fleet of 27 of the group’s container vessels and five bulk vessels served the alternative shipping trade corridors “to ensure uninterrupted cargo movement and supply chain continuity”, the company said.
AD Ports is also setting up land trade corridors from its Fujairah Terminals and Khor Fakkan Port to Khalifa Port, Jebel Ali Port and Sharjah, with the addition of 400 trucks in the second quarter. It has also increased rail service frequency with Etihad Rail to support operations.
“Alternative multimodal measures also included new air cargo solutions, especially for critical commodities such as food and pharmaceuticals, with six chartered aircraft to date,” AD Ports said.
The company further plans to boost its warehousing and storage capacity, currently at 54,000 square metres, by the end of the year and procure additional refrigerated and dry containers.
Growth spree
AD Ports, whose portfolio includes 40 terminals and a presence in 50 countries, has been on a deal-making spree over the past few quarters as it expands its footprint and strengthens its global network.
In June, it announced its largest-ever acquisition, buying Corredor Logística e Infraestrutura, an agri-bulk port terminal operator in Brazil, for an enterprise value of Dh3.1 billion.
The transaction, which marks AD Ports' entry into the South American market, is expected to close at the end of the third quarter of this year.
The company also purchased MBS Logistics, a Germany-based global integrated logistics services provider, for Dh300 million to boost its footprint in freight-forwarding services. The deal is expected to close in the fourth quarter.
Also in June, AD Ports acquired an additional 30 per cent equity stake valued at Dh1.1 billion in Dubai-based Global Feeder Shipping, raising its total holding to 81 per cent.
The company has also made an offer for a majority stake in Alexandria Container and Cargo Handling Company, which is now expected to close in the fourth quarter.
The acquisitions are expected to be funded from AD Ports' undrawn credit facilities, it said.
