Strong Start to the Year with Outstanding EBITDA and Revenue Growth…

Global Investment Holdings announces Consolidated Net Revenues of 260.4mn TL and an Operating EBITDA of 78.7mn TL in the first quarter of 2019, which indicate a striking 63% and 93% growth compared to a year ago, respectively. 

Global Investment Holdings (“GIH“ or the “Group”) reports consolidated revenues of 260.4mn TL for the first three months of 2019, representing a robust growth of 63% compared to the same period last year; while announcing a consolidated operating EBITDA of 78.7mn TL, marking an outstanding 93% yoy growth. Global Investment Holdings’ Chairman, Mehmet Kutman, stated that “Despite the shaky environment through the period, we are proud to announce that we have had a solid start to the year with our operations and financials showing outstanding improvement year over year. With the support of our diversified portfolio structure, uninterrupted investments and prudent risk measures, we continued to grow and improve our efficiency. These results show that we are well positioned to leverage on the growth prospects and reconfirm the strength of our strategy and our successful execution.”

GIH announced its financial results for the first quarter of 2019. Consolidated net revenues reached 260.4mn TL compared to 159.5mn TL last year, representing a sturdy increase of 63% yoy. All the business divisions under the Company contributed to this increase, with Gas and Ports divisions contributing the most.

In the first three months of 2019, Operational Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to 78.7mn TL, compared to an EBITDA of 40.7mn TL in the same period last year, which represents a substantial 93% growth over the same period last year. Ports and Gas divisions were the major contributors to the EBITDA increase.

On a divisional basis, the Group’s ports subsidiary, Global Ports Holding Plc (GPH) welcomed 510k cruise passengers in Q1 2019, indicating a pleasing growth rate of 52.4% yoy, driven by the first time consolidation of the new ports. Organic passenger growth was 2.0% yoy with good growth in Valletta Cruise Port in particular. Meanwhile, although it is early in the cruise season, Turkish cruise ports recorded strong passenger growth; in particular Ege Port’s passenger number increased by 85% in Q1 2019 yoy. On the commercial ports business, container volumes were up 2.6% yoy, with both commercial ports delivering growth. Marble volumes registered 1.4% growth yoy at Port Akdeniz in the period, reversing the negative trend experienced in Q4 2018. Meanwhile, General & Bulk cargo volumes fell 59.1% yoy. The decline was primarily driven by lack of project cargo in Q1 2019 and a continuation of the trends report for H2 2018, with General & bulk cargo volumes at Port Akdeniz falling 66.2% in the quarter. 

The Ports Division’s revenues reached 110.8mn TL at the end of first three months of 2019, up by a solid 41% over the same period of 2018. Higher pax volumes at Valetta Cruise Port and first time consolidation of new ports were the main drivers of the revenue growth. 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 Ports Division’s Operating Consolidated EBITDA was 66.9mn TL, up by a notable 54% yoy. EBITDA growth was mainly attributable to the strong contribution from the equity accounted associate ports, particularly Singapore, which do not contribute to revenue; as well as first time consolidation effect of new ports. Meanwhile, a favourable currency environment in Turkey resulted in EBITDA improvement.

Group’s Gas Division distributed 31.3mn m3 sales volume in Q1 2019, compared to 16.9mn m3 for the same period of 2018 (excluding 6.8mn m3 pipeline gas sales). Volume increase was a result of the strategy to increase winter sales in order to eliminate summer peaks. Revenues more than doubled yoy, reaching 73.4mn TL; mainly attributable to the increase of sales volume and better pricing as pass through Botaş tariff increased (Q1 2018 including pipeline gas sales of 5.6mn TL for gas balancing). Meanwhile, Gas division’s operating EBITDA reached 13.2mn TL in the quarter compared to a mere breakeven level of last year and translating into c.17pp EBITDA margin expansion. Efficiency measures undertaken in cost management and strong revenue growth helped Naturelgaz’s outstanding profitability improvement in the period.

Power division, which includes co/tri-generation and biomass based renewable power production, reported 25.1mn TL revenues in Q1 2019, up by a solid 41% over the same period of last year. The increase was mainly attributable to the commencement of 12MW Mardin biomass power plant, selling electricity at the feed-in tariff rate of 13.3 dollar-cent/kWh. On the EBITDA front, despite the solid revenue growth, power business generated -1.9mn TL EBITDA compared to 0.3mn TL in Q1 2018. The weakness in biomass was mainly attributable to the customary ramp-up period needed during commissioning stage of Mardin, as well as the heavy rainfall in biomass plant regions through the quarter. On the co/tri-generation side, increased gas price was partially offset by the increase in electricity prices, which is expected to be normalized in the coming periods.

Mining division realized 134,177 tons of product sales, indicating a healthy 31% yoy volume growth in Q1 2019. The Mining Division reported revenues of 25.6mn TL, almost doubling yoy, while operating EBITDA was realized at 6.0mn TL, increasing by 6 folds yoy. Operational performance improved remarkably during the period thanks to the increase in sales volume, improvement in production performance as well as enhancement in pricing.

Real Estate Division reported revenues of 11.7mn TL in the first quarter of the year, up by 42% yoy, while operating EBITDA stood at 6.0mn TL, slightly higher than 5.8mn TL a year ago. The increase is mainly attributable to the higher revenue recognition in SkyCity office project. Meanwhile, conversion of FX based contracts to TL offset some margin gains from operational efficiency.

Brokerage & Asset Management Division reported revenues of 13.8mn TL for Q1 2019, indicating a 10% increase yoy, and an EBITDA of 1.7mn TL, almost doubling yoy. 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 82.4mn TL in Q1 2019, compared to a net loss of 56.6mn TL in Q1 2018. 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 59.4mn TL in Q1 2018 to 85.3mn TL in Q1 2019. Also, the Group has incurred 51.8mn TL net non-cash foreign exchange losses, compared to 16.7mn TL in the same period last year. Net interest expenses in the quarter were 45.0mn TL, compared to last year’s 33.6mn TL increase is solely attributable to the weakness in TL against hard currencies. 

Commenting on the results, CFO Kerem Eser stated that “Our results for the first quarter mark a strong start to 2019. Our successful operational performance enabled us to deliver these strong financial results. Due to the seasonal nature of the businesses, the first quarter of the year is always the quietest trading period in particular for the Ports and the Gas divisions of the Group, and does not fully inform about the performance for the full year. Despite such seasonality effect, both our ports and gas divisions recorded pleasing operational and financial results in Q1 2019. Looking forward, we are confident as we are taking the right steps to address current macro environment with our track record of effective execution to deliver strong profitable growth and generate high cash flow.”

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