GIH 9M 2023 Financial Results
08 Kasım 2023
Global Investment Holdings’ Chairman & CEO, Mehmet Kutman, stated:
“On this significant point in history when we celebrate the 100th anniversary of our Republic, we fondly remember its founders, particularly Atatürk, with respect, gratitude, and longing. We feel the excitement of carrying our Republic into the next 100 years with many successes together. As we continue to walk resolutely on the path left to us by our Great Leader, we carry the responsibility of preserving this legacy in our hearts.”
“I am proud to share that we’ve successfully navigated the initial nine months, even in the face of considerable challenges. Since our last webcast in August, we’ve witnessed a notable increase in geopolitical risks, which persist as substantial hurdles for the worldwide economy. Numerous nations are grappling with elevated inflation rates, which continue to surpass historical norms, leading to the maintenance of stringent monetary policies. Throughout this timeframe, despite the difficulties of operating in uncertain conditions with limited foresight, we consistently delivered positive results. In the first nine months of 2023, we excelled in generating impressive Net Profit, Revenue, and EBITDA compared to the corresponding period last year. I’m confident that by maintaining our current level of determination and performance, we’re poised to deliver even more exceptional results in the final quarter of the year.”
The Chairman emphasize that “I’d like to commence my remarks with an exceedingly important piece of news concerning our port business. GPH has issued USD 330 million of secured private placement notes (“Notes”) to insurance companies and long-term asset managers at a fixed coupon of 7.87%. The Notes have received an investment grade credit rating from two rating agencies and will fully amortize over 17 years, with a weighted average maturity of c13 years. The majority of the proceeds have been used to repay in full the outstanding senior secured loan from Sixth Street, including early repayment fees and accrued interest. The balance of proceeds from the Notes will primarily be used to fund further Caribbean expansion and the payment of transaction costs. This financing generates material savings of cash interest expenses and creates a stable, long-term funding base for the Group. Further, it secures the financing of our growth pipeline.
Additionaly, GPH reached an agreement 10-year port concession agreement, with a potential 5-year extension option, by bremenports GmbH & Co. KG (“bremenports”) on behalf of the city of Bremen regarding the operations at the Cruise Terminal Columbusbahnhof Bremerhaven (“Bremerhaven Cruise Port”). The cruise facilities at Bremerhaven Cruise Port are currently undergoing a multimillion-euro investment by the local authorities, which once completed will expand and renew the port facilities. GPH expects to take over operations of the port in the first quarter of calendar year 2025, when the agreement with the current operator ends.
The Chairman continued: “Bookings remained strong throughout the third quarter, significantly exceeding 2019 levels. Closer-in demand for 2023 sailings exceeded expectations and contributed to higher load factors in the third quarter. Demand for 2024 has continued to accelerate, with bookings significantly and consistently outpacing 2019 levels. Booked load factors and rates are higher than all prior years while the booking window has continued to extend. On GPH front, average occupancy rate of the cruise ships visiting GPH’s ports was 115% in August 2023. Looking into the rest of the year, current call reservations at GPH’s consolidated cruise ports for Apr 2023- Mar 2024 period imply passenger volumes in excess of 11.8 mn (Passenger volumes at all ports, including equity accounted ports La Goulette, Lisbon, Singapore, Venice are expected to be in excess of 15m). According to Cruise Industry News, by the end of 2027, passenger capacity in the cruise industry is forecast to grow to over 40 mn, a growth rate of 45% from pre-Covid levels.
The Chairman added, “The performance of our business continues to accelerate, driven by strong demand and excellent operational execution.
As for Gas business, despite the challenging market conditions, Naturelgaz has delivered sound results preserving its pioneer position in the market. Naturelgaz has focused on investments in 2023 which target to increase capacity and cut costs; spending nearly 230mn TL (financed by equity) in 9M 2023.
As for Power business, The Group is also planning to complete hybrid solar farm investments with 3.6 MW capacity in the last quarter of 2023 in its biomass plants 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. While the installation of those hybrid solar plants is in progress, subsequent to the new regulation which was effective in October 2022, the Group applied to the EMRA (Energy Market Regulatory Authority) to increase the hybrid capacity to 11.7 MW in total. In October 2023, the relevant application for an increase in capacity was approved by EMRA
Commenting on the results, the Chief Financial Officer of Global Investment Holdings, Ferdağ Ildır, stated:
“GIH has been taking major effective steps to reduce the debt burden since 2021. Holding standalone debt declined nearly by half in USD terms in the last two years. Meanwhile, profitability was remarkably boosted thanks to the bolstering activity in all of the business lines, especially the return of cruise port operations. As a result, GIH’s Net Debt / EBITDA dramatically improved, declining to 3.9x at 30.09.2023 on a consolidated basis from 11.6x at 2021 YE. Hence, with a deleveraged balance sheet, dividend upstream and strong operations from its subsidiaries, the outlook seems quite promising for the upcoming periods.”
Global Investment Holdings reported 6.4 bn TL revenues (excluding IFRIC-12 Construction Revenue) in 9M 2023, indicating a robust 38% increase yoy well above inflation, with strong contribution from major business divisions, with ports and brokerage&asset management divisions contributing the most.
Global Investment Holdings’ consolidated operating EBITDA soared by 58% in 9M 2023 yoy well above inflation, reaching 2.6bn TL and leading to margin expansion. EBITDA growth was mainly driven by a solid contribution from the ports business and brokerage&asset management.
GIH reported a consolidated net profit of 530.2mn TL in 9M 2023, compared to a net profit of TL 262.2mn in 9M 2022. The bottom line incorporated TL 823.5mn of non-cash charges of which TL 755.4mn were depreciation and amortization, and TL 68.1mn in net foreign exchange loss.
Depreciation and amortization charges, increased from TL 529.4mn in 9M 2022 to TL 755.4mn in 9M 2023.
The Group’s net interest expenses increased from TL 347.8mn TL in 9M 2022 to TL 501.9mn in 9M 2023, mainly driven by the increase in LIBOR and depreciation of TL in 9M 2023 yoy.
On a divisional basis:
On the ports side, average occupancy rates of the cruise ships visiting GPH`s consolidated ports in Aug 2023 reached 115%. Number of calls at GPH`s ports in Sep 2023 was 16% higher than Sep 2022 level, while passenger movements at GPH ports in Sep 2023 standalone was 31% higher than Sep 2022 level.
Revenues (excluding IFRIC-12 Construction Revenue) surged by 118% in 9M 2023 compared to 9M 2022, reaching TL 2,654bn , while adjusted EBITDA jumped by 133% compared to 9M 2022 reaching TL 1,716bn in 9M 2023
Naturelgaz, sales volume reached 173mn Sm3 in 9M 2023, representing an increase of 6% yoy. Citygas sales volume increased by 67% yoy, reaching 74.1mn Sm3. Revenues decreased by 12% yoy in 9M 2023, standing at TL 2,119bn. Gross profit decreased by 35% in 9M 2023 yoy, standing at TL 425 mn.; while EBITDA narrowed down by 40% yoy, standing at TL 363.9mn.
The most significant factors that suppressed Revenues, gross profitability and EBITDA were the increase in logistics and electricity expenses as well as opex, due to inflationary market conditions. As a sector dynamic, reflection of cost increases to sales prices does not happen simultaneously, but come with a lag.
Another factor limiting profitability was the rise in depreciation expenses resulting from increased investments.
Naturelgaz’s net cash surplus stood at 105.7mn TL at 30 September 2023 as opposed to 335mn TL at 31 December, 2022. I. In addition, Naturelgaz distributed a dividend payment of TL 350 mn to shareholders on April 4, 2023.
The power division reported 645.5mn TL revenues in 9M 2023, indicating a 44% increase yoy. EBITDA increased by a mere 4% to 171mn TL in 9M 2023 yoy. Limited growth in EBITDA in 9M 2023 was mainly caused by the negative impact of the TL inflation rate realizing higher than the increase in FX rates, resulting in contracting margins for businesses with hard currency revenues and TL costs.
The mining division Despite the stronger demand from the local market, sales volume declined by 38% to 266,172 tons in 9M 2023 yoy due to the decline in demand from the European markets caused by the recession. The Company’s main export markets continued to be Spain, Italy and Egypt. Export related sales volume was 184,955 tons while domestic sales volume was realized at 81,217 tons for the period.
The mining division announced revenues of 267.7 mn TL in 9M 2023.
The operating EBITDA was 59.9mn TL in 9M 2023, indicating a 35% decline yoy. The decline in EBITDA was mainly attributable to lower sales volume, increased portion of domestic sales in total sales mix, and contracting operating margins as a result of higher inflation rates compared to FX rate hikes.
The real estate registered 38mn TL increase in revenues and 16,3mn TL increase in EBITDA in 9M 2023 yoy, with revenues and EBITDA standing at 89,1mn TL and 41,5mn TL, respectively. Operational improvement is mainly attributable to the increasing contribution from higher EBITDA generating rental operations
The brokerage & asset management division revenues stood at 581.1mn TL in 9M 2023, registering a 147% increase yoy, thanks to the contribution from increasing transaction volumes while operating EBITDA was 289.5mn TL registering a 317% increase yoy
Indebtedness:
Holding consolidated net debt stood at 661.4mn USD (TL 17.1 bn) at the 9M 2023. Meanwhile, excluding GIH standalone, consolidated gross debt of our operational divisions stood at 692,6mn USD. (Ports division: $ 611,2mn).
Consolidated Net Debt/EBITDA multiplier is 3.9x at 9M 2023 as opposed to 3.8x at 2022 year end. However, when Nassau’s long-term debt is excluded, Net Debt / EBITDA multiplier is 3.0x at 9M 2023 versus 2.8x 2022 year end. When entire ports business is excluded, Net Debt/EBITDA multiplier stands at 1.4x at 9M 2023 as opposed to 0.9x 2022 year end. The main reasons for the increase in the Net Debt / EBITDA multiplier have been dividend payments of subsidiaries, payment to Privatization Authority regarding Ege Port concession extension and Capex.
For further information, please contact:
GIH Investor Relations
Tel: +90 212 244 60 00
E-mail: investor@global.com.tr
