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Standard & Poor’s raises Abu Dhabi Ports’ credit rating to A+

Standard & Poor’s raises Abu Dhabi Ports’ credit rating to A+
7 Aug 2024 08:19

HASSOUNA AL TAYEB (ABU DHABI)

Standard & Poor’s has upgraded Abu Dhabi Ports Group’s credit rating to A+, with a stable outlook.

This decision reflects the group’s commitment to maintaining strong credit levels and a robust balance sheet.

The agency’s report predicts that the maritime and logistics sectors will contribute between 45 percent and 50 percent to earnings before interest, taxes, depreciation, and amortisation (EBITDA) from 2024 to 2026, compared to less than 30 percent in recent years.

It also expects Abu Dhabi Ports to maintain flexible operational performance, with adjusted profit margins averaging around 25 percent during this period, up from 22.3 percent in 2023.

Cash liquidity at Abu Dhabi Ports, bolstered by operational activities, is projected to increase by 18 percent to 23 percent from 2024 to 2026.

Improved credit metrics, supported by operational flexibility, limited additional acquisitions, and potential asset monetisation benefits, are also anticipated.

In the past 12 to 18 months, Abu Dhabi Ports Group has made several acquisitions worth Dh6.7 billion, including Noatum Logistics and GFS Shipping.

These acquisitions positively impacted the first quarter results of this year.

The report indicates that financial leverage and asset monetisation initiatives have helped maintain credit metrics suitable for the A+ rating, with the potential to offset performance weaknesses or extensive capital expenditure plans.

Despite the growing contribution from the maritime and logistics sectors, these areas remain complementary, focusing on managing Abu Dhabi’s non-oil exports through dedicated port infrastructure.

The agency expects at least 50 percent of these businesses to remain insulated from the volatility of the shipping and logistics industry.

Should profits from these sectors exceed 50 percent of EBITDA, the agency will maintain a positive outlook on Abu Dhabi Ports’ credit quality.

Standard & Poor’s highlighted Abu Dhabi Ports’ revenue growth strategies, including contracts with economic cities, free zones, concessions, and partnerships with leading global shipping companies.

The group’s operating efficiency and modern infrastructure have driven revenue growth.

Profits recovered in the first quarter of this year, thanks to cash flows and acquisitions made between 2022 and 2023.

Adjusted EBITDA margins reached approximately 25.1 percent in March 2024, up from 15-17 percent in the first half of 2023.

Abu Dhabi Ports handles about 50 percent of imports and most non-oil exports, including a significant share of Abu Dhabi’s trade in food and beverages.

The group supports the Abu Dhabi government’s strategy to diversify the economy, as it owns all of Abu Dhabi’s non-oil ports.

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