GIH 9M 2022 Financial Results: Emerged out of the pandemic stronger: Stunning Profit, Revenue, EBITDA growth
09 November 2022
Global Investment Holdings’ Chairman & CEO, Mehmet Kutman, stated:
GIH has delivered an outstanding set of results in the third quarter of 2022 despite challenging macroeconomic conditions. The third quarter of the year was a period in which inflationary pressures came to the fore due to increased energy and commodity prices driven by geopolitical tensions and compelling macroeconomic effects. I am having the pleasure to say that we have emerged out of the pandemic stronger with an expanded ports portfolio on a wider geography, deleveraged balance sheet, successful IPOs of our gas and power generation businesses, dividend upstream and such. We had made a promising start to the year in Q1; which had continued into Q2. The ongoing accelerated growth continued strongly in Q3 2022, presenting itself in outstanding revenue, EBITDA and profit figures and confirming normalization. We have always trusted in the structure of companies in our portfolio. Our positive profitability has increased on a consolidated basis with normalized commercial life after the pandemic. All our business lines, with gas and ports businesses contributing the most, demonstrated superior performances in the third quarter of 2022.
The restart of the cruise business continued to dramatically progress and third quarter results were better than expectations thanks to the higher occupancy rates driven by strong demand. Occupancy rates for the cruise ships continued to improve, averaging between 90-95%; while in the Caribbeans, occupancy rates reached c.105% by the end of Q3 2022. The cruise industry currently expects occupancy rates to improve further and reach triple digits (pre-pandemic levels) by the end of the year.
The Chairman added, “We have continued our strategic expansion in the ports despite the continuing challenges of the pandemic. In Q1, we had added Tarragona Cruise Port in Spain and Crotone Cruise Port in Italy to our network and in Q2 we had received final acceptance for the concessions for three cruise ports in the Canary Islands: Las Palmas de Gran Canaria, Arrecife (Lanzarote) and Puerto del Rosario (Fuerteventura). In Q3, we had signed a 30-year concession agreement with the Puerto Rico Ports Authority for San Cruise Port, Puerto Rico, marking a significant development in our strategic ambitions in the Caribbean. Adding on, recently, we have signed a Memorandum of Understanding (MoU) with the Government of St Lucia for a 30-year concession, with a potential 10-year extension option for the cruise related operations in St Lucia. Under the terms of the MoU, both parties have entered into an exclusive period. During this period, GPH and the Government of St Lucia will continue to carry out extensive due diligence, and both parties will work towards successfully signing the concession agreement. In addition, GPH will invest in a material upgrade of the cruise port facilities, including the expansion of the existing berth in Point Seraphine, which will allow the handling of Oasis class ships, as well as transforming the retail experience.
The Chairman added: “Our gas business continued its accelerated growth in the third quarter of 2022. The Company’s market share in the total non-piped (CNG & LNG) natural gas market is 33.2% and in bulk CNG product is 82.5%. Our gas business decreased seasonality effect to a large extend, thanks to the increase in City Gas coverage (number of counties supplied by City Gas business line increased from 80s to triple digits).
The Chairman continued: “I am proud to say that our power generation subsidiary, Consus Enerji (operating in renewables and distributed power) successfully completed its IPO process in April 2022, marking a major milestone in its history. Such IPO brought us closer to our goals to list all operational companies under Global Investment Holdings’ umbrella, ensuring profitability hence dividends to our shareholders and adopting and introducing best practice transparency and corporate governance principles across the Group. Furthermore, Consus is also planning to complete hybrid solar farm investments with 3.6 MW capacity during Q4 2022 and Q1 2023 in its biomass plant areas in parallel with the new resource regulation to improve generation performance as well as plant efficiencies. Accordingly, the generation licenses of two biomass power plants have been amended, by which the facilities will operate as hybrid renewable power plants and generate electricity from both biomass and solar energy (primary source: biomas, secondary source: solar). Furthermore, in October 2022, Consus applied to EMRA to increase the hybrid capacity to 11.7MW in total. In distributed power, Consus has initiated developing solar power plants on BOT and BTO basis for large-scale industrial and commercial enterprises to compensate their electricity consumption for a potential capacity in excess of 200MW.
The Chairman added: “Ardus Gayrimenkul Yatırımları A.Ş., 100% subsidiary of GIH has sold its shares in Pera Gayrimenkul Yatırım Ortaklığı A.Ş., previously a subsidiary of GIH and GIH has sold its shares in Pera Gayrimenkul Yatırım Ortaklığı A.Ş. As a result, GIH has no direct or indirect shares left in Pera Gayrimenkul Yatırım Ortaklığı A.Ş”.
Commenting on the results, the Chief Financial Officer of Global Investment Holdings, Ferdağ Ildır, stated:
“Our Group has been taking solid effective steps to reduce its effective debt burden, a process we started in 2021. The listing of our subsidiaries Naturelgaz and Consus Enerji, the sale of our commercial port in Antalya, and the capital increase process of GIH resulted as holding stand-alone gross debt decline by 46% in US$ terms in 2021, while marking a further 14% decline in 2022 third quarter. Meanwhile, EBITDA generation was remarkably boosted in Q3 2022 (Jul-Sep) thanks to the bolstering activity in all of our business lines. Accordingly, our Net Debt / EBITDA was positively impacted, declining further to 4.3x at Q3 2022 from 6.7x at Q2 2022. Looking ahead, we maintain our positive stance along the year and beyond.
Global Investment Holdings reported 4.6 bn TL revenues (excluding IFRIC-12 Construction Revenue) in 9M 2022, indicating a robust 340% increase yoy with strong contribution from all business divisions, with the gas division and port division contributing the most. The improvement in revenue generation has gained stronger momentum in Q3 2022 (Jul-Sep), in line with strengthening activity in underlying businesses, marking a 5 times increase over Q3 2021.
Global Investment Holdings’ consolidated operating EBITDA soared by 760% in 9M 2022 yoy and reached 1.6mn TL, driven by a solid contribution from all business divisions, with the Ports and Gas division contributing the most. Strong EBITDA generation gained further momentum in Q3 2022 (Jul-Sep) in line with the increasing occupancy rates and cruise lines having returned to service with full fleet capacity.
GIH reported a consolidated net profit of 262.2m TL in 9M 2022, compared to a net loss of TL 398.7m in 9M 2021. The bottom line incorporated TL 739.3 of non-cash charges of which TL 529.4m were depreciation and amortization, and TL 209.9m in net foreign exchange loss. Meanwhile, TL 104.7m one-off income included project expenses and IFRS related adjustments such as non-cash valuation gain from investment properties.
Depreciation and amortization charges, increased from TL 266,2.2m in 9M 2021 to TL 529.4m in 9M 2022. If the FX rate had remained the same as 9M 2021 average, depreciation and amortization expense would have been TL 256.1m lower.
The Group’s net interest expenses increased from TL 216.5m TL in 9M 2021 to TL 347.8m in 9M 2022. If average FX rate had maintained its 9M 2021 level, net interest expense would have been TL 170.6m lower than the reported figure in 9M 2022.
On a divisional basis:
Naturelgaz maintained its solid financial position and recorded significant growth in 9M 2022. Sales volume reached 163.2mn Sm3 in 9M 2022, representing an increase of 17% yoy. Citygas sales, whose share in the total sales volume increased gradually in 2021 and 9M 2022, continued its rapid growth in the third quarter of the year as well. Citygas sales volume increased by 72% yoy, reaching 44.3mn Sm3. Revenues increased by 496% yoy in 9M 2022, reaching TL 2,4 mn, reflecting the increase in sales volume especially in Citygas, Bulk CNG. Gross profit reached TL659.4 mn in 9M 2022, representing an increase of 597% yoy, based on company standalone financials. EBITDA increased by 813% yoy in 9M 2022, reaching TL 604mn. The decrease in seasonality thanks to the increase in Citygas sales volume, effective cost management, and the effects of price differentials due to the higher-than-expected increases in natural gas price index contributed significantly to the EBITDA growth.
Profit before tax, which was TL 25.6mn in Q3 2021, increased to TL 535.4mn in the third quarter of 2022, based on company standalone financials. Naturelgaz’s net financial debt amounting to 2.4mn TL as of June 30, 2022, has turned into 192,6mn TL net cash surplus as of September 30, 2022. In addition, Naturelgaz distributed a gross dividend payment of TL 35.8 mn to shareholders on May 9, 2022.
On the ports side, Average occupancy rates improved to above 90 during Q3 2022( Consolidated port, volume-weighted). Major cruise lines expect occupancy rates to improve and reach triple digits (pre-pandemic levels) in 2023. In the Caribbeans, occupancy rates already exceeded 100% at GPH`s ports. While the average occupancy rates of the cruise ships visiting GPH`s consolidated ports in January 2022 was 42% only, it continued to increase gradually over the months and reached 97% in August 2022. Number of calls at GPH`s consolidated ports in 2022 standalone was 24% higher than September 2019 (prepandemic) levels, while number of passengers visiting GPH ports in September 2022 standalone was 7% higher than 2019 levels (2019 levels are adjusted to include full year for Nassau and Antigua). In Jan-Sep 2022, total consolidated passenger numbers reached 76% of Jan-Sep 2019; while total consolidated call numbers were %11 higher than Jan-Sep 2019. Meanwhile, current cruise call reservations for calendar year 2023 are 4,538, implying passenger volumes in excess of 11 million assuming pre-pandemic occupancy rates. These expected values compare favourably to the actual number of cruise calls in the last pre-pandemic year 2019, where GPH consolidated ports reached 3,346 cruise calls (Adjusted to include full year for Nassau and Antigua)
Revenue and positive EBITDA generation gained further momentum in Q3 2022 in line with the increasing occupancy rates and cruise lines having returned to service with full fleet capacity. Accordingly, revenues surged by 707% yoy, reaching 1.2bn TL (excluding IFRIC-12 Construction Revenue) in 9M 2022, while adjusted EBITDA marked a positive 737 mn TL in 9M 2022 as opposed to -21.5mn TL in 9M 2021.
The power division’s revenues, operations of which include distributed power (cogeneration/ trigeneration), biomass and solar based renewable energy production, and wholesale energy services, have risen 80% yoy in 9M 2022, generating 447mn TL. The division generated 165mn TL EBITDA in 9M 2022, indicating a 73% increase yoy, which is mainly attributable to the increase in electricity prices and FX rates. All sub-segments of the power division contributed to the revenue growth of the power division in 9M 2022 compared to the same period in 2021. On the EBITDA front, all sub-segments except for distributed power contributed to the EBITDA growth in 9M 2022 compared to a year ago. The EBITDA decline in distributed power sub-segment was due to the gas restrictions in Q1 2022 and the increase in gas prices.
Registering a major milestone in its history, Consus Enerji has successfully completed its IPO process in April 2022. Trading on Borsa Istanbul for Consus shares commenced on 20th April 2022 with 30% free float, while GIH remains the largest individual shareholder with 72.4% stake.
The mining division realized 423,853 tons of product sales volume in the third quarter of 2022, up by 10% yoy, mainly due to strong feldspar demand from export markets. The Company’s main export markets continued to be Spain, Italy and Egypt. Export related sales volume reached 342,401 tons while domestic sales volume was realized at 81,452 tons for the period.
The mining division reported revenues of 268mn TL, surging by 122% yoy in 9M 2022, thanks to the growth of export sales and hard currency earnings through export markets. Such performance indicates a strong demand in the export markets. Operating EBITDA soared by 113% in 9M 2022 YoY, reaching 92mn TL, driven by the sales volume increase and dominancy of hard currency denominated revenues
The real estate division registered 29mn TL increase in revenues and 16mn TL increase in EBITDA in 9M 2022 yoy, with revenues and EBITDA standing at 51mn TL and 25mn TL, respectively. Operational improvement is mainly attributable to the increasing contribution from higher EBITDA generating rental operations. Rental revenues increased by 25mn TL with the post-pandemic normalization, while real estate sales inreased by 4.5mn TL
The brokerage & asset management division’s revenues reached 236mn TL in 9M 2022, 127% increase yoy, thanks to the contribution from increasing in transaction volumes and full consolidation of İstanbul Asset Management. Meanwhile, operating EBITDA stood at 69mn TL in 9M 2022 (44mn TL in 9M 2021).
Indebtedness:
Since 2021, we have intended to decrease our indebtedness rapidly and have made good progress towards this goal. The listing of our subsidiaries Naturelgaz and Consus Enerji, the sale of our commercial port in Antalya, and the capital increase process of GIH melted down holding stand-alone gross debt by 46% in US$ terms in 2021, while marking a further 14% decline in 9M 2022. (Gross debt decreased from USD 55.8 mn at the end of 2021 to USD 47.8mn at 30.09.2022.)
Holding consolidated net debt decreased from 556.6 mn USD (TL 7.223 mn ) at the end of 2021 to 549.5mn USD (TL 10.167 mn ) at 30.09.2022. Meanwhile, excluding GIH, consolidated gross debt of our operational divisions stood at 622.3mn USD, of which 551mn USD belongs to our ports division GPH.
Consolidated Net Debt/EBITDA multiplier declined to 4.3x at 30.09.2022 from 11.6x at the end of 2021. However, when Nassau’s long-term debt is excluded, Net Debt / EBITDA multiplier declines to 3.2x at 30.09. 2022. When entire ports business is excluded, Net Debt/EBITDA multiplier declines further to 1.0x at 30.09.2022.
For further information, please contact:
GIH Investor Relations
Tel: +90 212 244 60 00
E-mail: investor@global.com.tr
