Superior operational and financial performance marked by Passenger, Revenue and EBITDA growth despite the challenging geo-political situation in Turkey and temporary pressure on container volumes in Port AkdenizGPH reports consolidated revenues of USD 114.9mn, and a consolidated EBITDA of USD 75.9mn in FY 2016. This translated into 66.1% consolidated EBITDA margin. Consolidated revenues and EBITDA registered 8.9% and 6.6% increase, respectively. When pro-forma effect of Valletta Cruise Port acquisition is taken into consideration, consolidated revenues and consolidated EBITDA remained stable in FY 2016 YoY. Segmental EBITDA grew by 9.2%, reaching USD 80.9mn in FY 2016 YoY.
Recent geo-political situation in Turkey put pressure on cruise and commercial volumes in Turkey.
These events can be summarized as:
- Ongoing tensions in East Med
- The coup Attempt in Turkey in July 2016
- Investigations launched by Chinese Authorities on marble imports to China in June 2016, which partially continued in Q3 2016
Driven by GPH’s well diversified cruise port network, GPH ports excluding Turkey managed to increase total cruise passengers by 26.8% YoY in FY 2016. The increase was mainly driven by Barcelona, Malaga, Singapore, Valletta and Lisbon. When Turkey is included, total passenger base still indicates a pleasing 10.8% YoY inorganic growth in FY 2016.
Despite the Perfect Storm environment, GPH managed to maximize revenue and EBITDA creation in FY 2016 on the back of:
- Inorganic growth: Valletta Cruise Port (Malta) and Venice Cruise Port (Italy) acquisitions
- Increasing share of turnaround passengers in total passenger mix, driven by Barcelona and Malaga; as well as extension of the cruise season
- A general traffic shift from East Med to West Med
- Tariff adjustments thanks to the tariff flexibility at operational ports due to underlying concessions
- 11.1% depreciation of TL against USD in FY 2016 compared to FY 2015, which translated into c.2.3% increase in EBITDA, as approximately 70% of costs are in TL in Turkish port operations
On the EBITDA front, total segmental EBITDA (composed of operational companies only, excluding GPH solo expenses) posted 9.2% growth in FY 2016 YoY, at USD 80.9mn. EBITDA maximization was driven by both commercial and cruise segments. Cruise EBITDA registered 7.2% growth in FY 2016 YoY, reaching USD 36.9mn; while commercial EBITDA increased by 10.9% in the same period YoY, at USD 44.0mn. When pro-forma effect of Valletta Cruise Port acquisition in FY 2015 is included, segmental EBITDA imply 3.0% organic growth, while cruise EBITDA indicate 5.1% drop due to the shrinkage at Turkish cruise ports.
Cruise EBITDA margin lost a couple of points in FY 2016 YoY due to lower contribution from Ege Ports (Turkey) which operated at 82% EBITDA margin in FY 2015, yet still standing at a satisfactory 68.8% level. On the contrary, driven by the per TEU and per ton revenue increase at Port Akdeniz, coupled with higher yield project cargo effect at both Port Akdeniz and Port of Adria, commercial EBITDA margin posted 400bps increase (reaching 71.9%) in FY 2016 YoY.As areminder, cruise EBITDA margin and commercial EBITDA margin for FY 2015 had stood at 73.2% and 67.9%, respectively. Strong revenue performance was mainly driven by Port Akdeniz – Antalya (commercial), Creuers (Barcelona including Malaga) and Malta; while solid EBITDA development YoY in FY 2016 was driven by Port Akdeniz – Antalya (commercial), Creuers (Barcelona including Malaga), Malta, Adria, and minorities (Venice, Lisbon and Singapore).
Net Debt / EBITDA stood at 3.7x in FY 2016 compared to 3.6x 2015YE.
Gross Debt / EBITDA stood at 4.4x in FY 2016, in line with bond covenants.
Cruise Port Operations:
Thanks to its well diversified portfolio and successful recent acquisitions, GPH managed to expand its cruise passenger base by a significant 10.8% in FY 2016 YoY, through organic and inorganic growth. Barcelona, Malaga, Singapore, Valletta (Malta) and Lisbon were the main contributors to compensate for the shrinkage at Turkish cruise ports to a large extend. Total cruise revenues and total cruise EBITDA recorded 14.0% and 7.2% growth, respectively. Cruise EBITDA margin went down from 73.2% in 9M 2015 to 68.8% in FY 2016. The decline in cruise EBITDA margin is mainly attributable to Valletta Cruise Port, which structurally has lower EBITDA margin due to retail operations; and the lower contribution from Ege Ports in Turkey in FY 2016, which operates at 70%-80% EBITDA margin (FY 2015 EBITDA Margin of Ege Ports was 82%).
On the other hand, cruise revenues and EBITDA outside Turkey posted 11.5% and 22.2% increases in FY 2016 YoY, respectively, mainly due to:
- 4.7% YoY organic growth in passenger numbers outside Turkey
- The increasing share of turnaround passengers in Barcelona and Malaga
- Ancillary revenues in Malta (commercial berthing, heavy machinery, duty free)
- EBITDA contribution from recently acquired Venice and increasing EBITDA contribution from Lisbon and Singapore through equity pick-up
Valletta Cruise Port (Malta), the recently acquired cruise port with its unique position for West Med and East Med itineraries, contributed significantly to GPH’s FY 2016 passenger, revenue and EBITDA performance. In line with GPH’s strategy to increase efficiency at the ports it acquires; Valletta Cruise Port’s revenues went up by 15.6% at USD 11.8mn revenues, indicating 15.6% increase YoY; while EBITDA surged by a solid 31.0% at USD 5.9mn in FY 2016 YoY, implying 583bps increase in EBITDA margin.
Additionally, a 20% tariff increase in Lisbon started to be applied in FY 2016, which is in line with GPH’s strategy to rationalize and optimize prices at the ports it operates.
Ege Ports (Kuşadası) revenues and EBITDA declined by 32.8% and 36.7%, respectively, in USD terms in FY 2016 YoY, due to the 36.4% shrinkage in the port’s passenger numbers due to the recent events in Turkey. Yet, Ege Ports has been among the least affected and most resilient ports in Turkey, thanks to the world-class security measures and unique excursion choices it offers. Ege Ports’ standalone captured 56% market share in Turkey in FY 2016, while GPH cruise ports in Turkey composed 73% of Turkey’s cruise ports market in the same period (as opposed to 42% in FY 2015).
Commercial Port Operations:
The impact from the general investigation launched by Chinese officials for imports of marble by the end of May 2016 was over by the end of 2016; Port Akdeniz managed to increase container levels in Q4 2016 YoY. TEU throughput of Port Akdeniz increased by 3.0%.
Meanwhile, total commercial revenues and EBITDA registered a 4.8% and 10.9% growth rates, respectively, in FY 2016 YoY, implying 395bps increase in commercial EBITDA margin (FY 2016 Commercial EBITDA Margin: 71.9%).
Tariff flexibility, depreciation of TL, a recently introduced revenue item (Verified Gross Mass - VGM) as well as other ancillary revenues (ie. container storage revenue and stuffing revenue), and project cargo element translated into stronger EBITDA and margins at Port Akdeniz. Container yield increased by 11.3% in FY 2016 YoY, reaching USD 205.9, continuing to support the margins. Almost half of the container yield increase was driven by the aforementioned new revenue items and side revenues, while the rest was attributable to tariff increase. Mainly driven by project cargo, general & bulk cargo yield surged by 18.2% in FY 2016 YoY, reaching USD 8.4 per ton. Additionally, 11.1% depreciation of TL in FY 2016 YoY, led to c.2.3% increase in EBITDA, as approximately 70% of costs are in TL in Turkish port operations. Commercial Revenues and EBITDA of Port Akdeniz increased by 6.9% and 10.2%, respectively, in FY 2016 YoY, translating into 236bps improvement in EBITDA margin in FY 2016 YoY, which stood at a solid 77.4%.
As for Port of Adria, TEU throughput registered 7.1% increase in FY 2016 YoY, while cargo volume dropped in FY 2016 YoY. This is mainly due to the change of hands of a main exporter in the region. This factory has been acquired by a Chinese company, which is expected to start operations in 2017. Container yields came out at USD 99.9/TEU in FY 2016 at Port of Adria, 2.9% higher than FY 2015 figure. Meanwhile, the weighted average container yield for combined commercial ports operations stood at USD 185.2/TEU in FY 2016, indicating a strong 9.4% increase YoY. Driven by the project cargo, general cargo revenue per ton climbed to USD 32.6 in FY 2016 from USD 9.2 in FY 2015, supporting revenue and EBITDA generation at Port of Adria. Project Cargo elements are basically the machinery, equipment and / constructions to be utilized at regional development projects. Port of Adria’s EBITDA grew by 21.5%, reaching USD 2.7mn, and implying 826bps increase in EBITDA margin.