Navigating through challenging times while reporting record financials…

Global Investment Holdings announces Consolidated Net Revenues of 1,128.4mn TL and an Operating EBITDA of 465.0mn TL in 2018, which indicate a striking 40% and 67% growth compared to 2017, respectively.

Global Investment Holdings (“GIH“ or the “Group”) reports consolidated revenues of 1,128.4mn TL for 2018, representing a robust growth of 40% compared to 2017; while consolidated operating EBITDA surged by 67% during the same period, reaching 465.0mn TL. Global Holdings’ Chairman, Mehmet Kutman, stated that “Despite the economic and political turmoil that reverberated around the world in 2018, this was a year of significant progress for Global Investment Holdings. Organically, our Group companies experienced another strong year overall and once again our operations and financials proved their resilience against external shocks. With the support of our diversified portfolio structure, prudent risk measures, and uninterrupted investments, we have continued to grow both our revenues and operating profits, concluding with solid free cash flow. 2019, Global Investment Holdings will continue to focus on its core businesses, grow sustainably and expand its investments into new markets.”

Mr. Chairman further said that, “In our ports business, we successfully managed to continue expanding our presence worldwide. We are proud to take our first steps into the Americas by acquiring the management of Havana’s cruise port and boosted our leading position in the Mediterranean cruise market with the concession for Zadar, Croatia. We made further progress in the Caribbean, where we recently signed a concession agreement for Antigua & Barbuda, and became a preferred bidder for Nassau Cruise Port, The Bahamas. 2018 has been a turning point for our CNG business; I am very pleased with their progress and contribution to the Group’s overall performance, and I am confident that 2019 will be as good for this business. Our power business reached 83.3MWe with the commissioning of Mardin biomass power plant in 2018. FINALLY I AM PROUD TO DECLARE THAT AFTER 4 YEARS OF EXTENSIVE CAPITAL COMMITMENTS, ALL OUR SUBSIDIARIES ARE CASHFLOW POSITIVE HENCE DO NOT REQUIRE ANY FURTHER CAPITAL INJECTION FOR OPERATIONAL PURPOSES.“

GIH announced its financial results for 2018. Consolidated net revenues reached 1,128.4mn TL compared to 805.9mn TL in 2017, representing a strong increase of 40%. All the business divisions under the Company contributed to this increase, with Ports, Gas and Power divisions contributing the most.

In 2018, Operational Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to 465.0mn TL, compared to 278.4mn TL in 2017, which represents a robust 67% growth.

On a divisional basis, the Group’s ports subsidiary, Global Ports Holding Plc (GPH) welcomed 4.4mn cruise passengers on a consolidated basis in 2018, indicating a growth rate of 8.8%. When all ports are taken into consideration, the equity accounted associate ports Venice, Lisbon and Singapore; GPH welcomed 8.4mn passengers, indicating a robust growth rate of 20% yoy. On the commercial ports business, General & Bulk Cargo volumes fell 9.2% and TEU Throughput fell by 5.1%. Despite no significant direct impact from tariffs or slowing trade, the general uncertainty around global trade should have played a part in the slowdown.

The Port Division’s revenues reached 601.0mn TL in 2018, up by a robust 42% yoy. Revenue growth was attributable to solid growth in both cruise and commercial segments. Higher pax volume at Spanish Ports with favorable passenger mix and the favorable currency environment in Turkey were the main drivers of the revenue growth at our Cruise ports. On the commercial ports side, revenue growth was mainly driven by higher yielding project cargo along with new services introduced in the year to drive diversification in cargo exposure. Ports Division’s revenues – which are mainly denominated in USD and EUR – further benefited from the depreciation of TL in value against those currencies during the period.

The Port Division’s Operating Consolidated EBITDA was 402.7mn TL, up by a notable 47% yoy, delivering a 67.1% Consolidated EBITDA margin for the year. EBITDA growth was driven by both cruise and commercial segments. Cruise EBITDA growth was mainly attributable to the strong contribution from the equity accounted associate ports which do not contribute to revenue; as well as the solid performance at Spanish ports, thanks to the positive gearing impact of the higher PAX volumes and favorable turnaround passenger mix in the period. Likewise, the higher yielding project cargo effect, operational improvements, continued growth in new services, and a favorable currency environment in Turkey resulted in EBITDA improvement for Commercial division.

The Group’s Gas Division distributed 138.2mn m³ of CNG (excluding spot gas sales) in 2018 compared to 149.2mn m³ in 2017. Revenues (excluding spot gas sales) increased by 32.0% yoy, reaching 242.1mn TL. The increase was mainly attributable to better pricing. Meanwhile, Gas Division’s operating EBITDA almost quadrupled in 2018 yoy, reaching 40.0mn TL and translating into c.11pp EBITDA margin expansion. Expiry of the 2 year contract for gas hedging, improved efficiency in cost management, and better pricing supported Naturelgaz’s solid profitability improvement in the period.

The Power division including co-generation and biomass based renewable power production reported 83.0mn TL revenue in 2018, more than doubling yoy. The increase was mainly attributable to the first time consolidation effect of biomass operations with 17.2MW installed capacity and feed-in tariff at 13.3 USc/Kwh coupled with capacity increase in co/tri-generation business. On the EBITDA front, Power business generated 7.1mn TL EBITDA  compared to a mere breakeven level in 2017 as the contribution from biomass plants to EBITDA has been highly effective since Q3 2018 as they have completed the ramp-up period and started working close to their optimum capacity.

The Mining division realized 496,400 tons of sales, indicating 21% yoy volume reduction in 2018, yet sales of high-quality products increased 29% yoy. Ratio of high-quality products within the sales mix also increased to 36% in 2018 compared to 22% in 2017. The Mining Division reported revenues of 78.2mn TL, indicating a 29% increase yoy, while operating EBITDA was realized at 22.0mn TL compared to 1.7mn TL a year ago. Despite contracting sales volume, as a result of the increase of high quality product ratio in the sales mix, improvement in production performance as well as enhancement in pricing, operating margins improved remarkably during the period.

Real Estate Division’s revenues almost doubled yoy, reaching 61.1mn TL in the year, while operating EBITDA stood at 25.6mn TL, remarkably higher than 20.6mn TL in 2017. The strong operating performance was mainly attributable to higher revenue recognition in SkyCity office project, coupled with solid performance at Van Shopping Mall.

The Brokerage & Asset Management Division reported revenues of 48.4mn TL in 2018, indicating a strong 17% increase yoy, and an EBITDA of 2.9mn TL, compared to 1.5mn TL in 2017. Strong operational performance can be attributed to the increase in trading volumes, as well as effective cost management.

GIH reported a consolidated net loss of 89.9mn TL in 2018, compared to a net loss of 329.2mn TL in 2017. Despite higher revenue recognition along with EBITDA maximization, net loss stemmed from non-cash depreciation and foreign currency translation differences incurred on Group’s long term borrowings. Depreciation and amortization charges have increased from 206.8mn TL in 2017 to 290.5mn TL in 2018. Also, the Group has incurred 89.7mn TL net non-cash foreign exchange losses, compared to 24.4mn TL in the last year. Net interest expenses in 2018 were 185.1mn TL, slightly higher compared to 2017 (165.2mn TL), despite the significant weakness in TL against hard currencies. This is a result of improvement in Group’s net indebtedness, following the IPO of the Ports Business and subscription by Centricus.

Commenting on the recent developments, CFO Kerem Eser stated that, “I am pleased to say that as Global Investment Holdings, 2018 was a solid year with significant improvement in all of our profitability metrics despite this shaky environment. We continued to benefit from our investments, growth in both domestic and international markets as well as our proactive approach and disciplined risk management. The Company will continue its policy of growth by means of new acquisitions and investments mainly into core businesses, which are infrastructure (ports), and clean energy.

Furthermore, Mr. Eser underlined that 2018 saw a decided turnaround in Naturalgaz, our compressed natural gas (CNG) business subsidiary, with the continuous, material and ongoing improvement in the operational and financial performance. We are evaluating the possibility of an initial public offering (IPO) of Naturelgaz, will further enhance the liquidity position of the Group, as well as strength Naturelgaz’s growth strategy in Turkey and abroad. Naturelgaz has an 18-20 percent share in Turkey’s non-piped natural gas transport sector.

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