Gulf Navigation's fleet of vessels includes petrochemical tankers, livestock transport ships, and marine support vessels, which allows it to service different markets. Courtesy Gulf Navigation
Gulf Navigation's fleet of vessels includes petrochemical tankers, livestock transport ships, and marine support vessels, which allows it to service different markets. Courtesy Gulf Navigation
Gulf Navigation's fleet of vessels includes petrochemical tankers, livestock transport ships, and marine support vessels, which allows it to service different markets. Courtesy Gulf Navigation
Gulf Navigation's fleet of vessels includes petrochemical tankers, livestock transport ships, and marine support vessels, which allows it to service different markets. Courtesy Gulf Navigation

Business

Markets

Gulf Navigation returns to profit in Q2 on higher cash flow and lower costs

The company's total assets at the end of June 30 reached $235m

Jennifer Gnana
Jennifer Gnana

August 14, 2021

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Dubai-listed maritime and shipping company Gulf Navigation swung to profit in the second quarter of 2021, as costs fell and operational cash flow climbed.

Net profit for the three months to the end of June climbed to Dh125,000 ($34,036), from a loss of Dh33.5 million for the same period last year, it said in a statement on Saturday.

Net profit for the first six months of 2021 also surged to Dh79m, from a net loss of Dh51m recorded a year earlier.

The company's operating profit for the six-month period surged to Dh100m from a loss of Dh27m for the same period in 2020. It operating revenue for the reporting period however, fell 8 per cent to reach Dh62m, while net cash flow reached Dh117m.


Gulf Navigation attributed its return to profitability to “enhancing the cash flows from operating activities, reducing operating costs by 32 per cent ... administrative expenses by 54 per cent, and addressing the majority of outstanding operational and financial matters”, its chairman Sheikh Theyab Al Nahyan said.

Total assets at the end of June 30 stood at Dh863m.

Earlier this year, Gulf Navigation reached an agreement with its lenders on new and flexible terms on its debt, allowing it to adapt to current market conditions.

In April, it restructured its biggest loan of Dh200m with Australis Maritime. The cost of its debt is set to decline 25 per cent, or Dh4m annually, following the arrangement.

The company also paid off its obligations to Abu Dhabi Commercial Bank earlier this year as it sought softer terms with other lenders.

In the second half of the year, the company plans to focus on chartering ships on long-term basis, exiting unprofitable business sectors and ensuring continuity of operations amid continued challenges to the shipping and logistics sector due to the Covid-19 pandemic, Sheikh Theyab said.

“We are also evaluating opportunities available to us for the purpose of increasing our maritime fleet, and entering into several strategic partnerships regionally and globally, which will provide the company with many diverse opportunities and the ability to grow throughout the region,” he added.

Gulf Navigation's fleet of vessels includes petrochemical tankers, livestock transport ships and marine support vessels, which allows it to service different markets.




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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Tailors and retailers miss out on back-to-school rush

Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”

A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.

“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”

 

 

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Updated: August 14, 2021, 4:27 PM
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