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Edited Transcript of GLYHO.IS earnings conference call or presentation 11-Oct-16 10:59am GMT

Q3 2016 Global Yatirim Holding AS Earnings Call

Istanbul Mar 24, 2020 (Thomson StreetEvents) -- Edited Transcript of Global Yatirim Holding AS earnings conference call or presentation Tuesday, October 11, 2016 at 10:59:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Mehmet Kerem Eser

Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to Global Yatirim Holding Third Quarter 2016 Financial Results Conference call. Today's speakers will be Mr. Kerem Eser, CFO; and Ms. Asli Su Ata, Investor Relation Director.

I will now hand over to your host, Mr. Kerem Eser. Sir, please go ahead.

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [2]

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Thank you. Thank you. Welcome all to Global Investment Holdings Year 2016 9 Months Result Call.

First of all, before I start, sorry for my voice. I have a kind of sore throat. Some might find my voice a bit sickly, but I'm not feeling the same way, but anyway.

In a snapshot, our 9 months consolidated revenues are reported as TRY 479.2 million, up from TRY 415.8 million in the same period last year, representing an increase of 15%. Consolidated EBITDA are TRY 163.4 million compared to TRY 143 million last year. It has been a very difficult environment, both internally and externally, as you are also well aware. And I must say, we are kind of pleased with our third quarter result in such that almost all of our business segments registered growth in revenues and EBITDA.

EBITDA increased in the first 9 months and has also been understated by an amount of TRY 16.2 million related with the sale of share in asset management company, of the Az-Global, and treasury shares in 2015, all at holding solo level. And if you adjust for this effect, increasing comparable EBITDA was close to 30% on a consolidated basis. Except for the brokerage arm, all other business segments contributed to the increase in revenue, Real Estate this time contributing perhaps the most, which is followed by the Ports, as you know, our flagship investment.

Before jumping into details of different business segments performance, one last point on consolidated results on the bottom line. Group reported a net loss of TRY 62.9 million compared to similar TRY 61.5 million in the same period last year. Again, the loss in both periods is primarily due to the noncash depreciation and amortization charges amounting to TRY 116.5 million this year and TRY 101 million last year. One of the reason is the net interest expenses amounting to TRY 108.5 million this year compared to TRY 84 million in 2015.

If we move on, on a segmental basis, Port division revenues reached TRY 264.7 million in the first 9 months, representing 22% increase over the same period. A significant portion of this increase is attributable to the contributions from the group's cruise port operations. Tension in the East Med and the attempted coup in July 15 had a massive impact on Turkey's overall cruise performance so far this year where the decrease in cruise passengers reached 65%. However, our ports operated by GPH were limited only to 39, thanks to the world-class security measures, utmost priority in our ports and unique excursion choices of Ege Ports and particular offers. As you know, GPH has a well-diversified cruise port network. And as a result of this, GPH ports, excluding Turkey, managed to increase cruise passengers by 26.6% year-on-year in 9 months 2016. And this increase was mainly driven by Barcelona, Malaga, Valetta and Singapore. Even Turkey is included. Total passenger base still indicates a satisfactory 10% increase, which is inorganic growth in 9 months 2016. Similarly, cruise revenues and EBITDA recorded 15.4% and 5.9% increase in 9 months 2016.

The division's EBITDA, the Port division EBITDA, were reported as TRY 156.1 million compared to TRY 123.6 million over the same period in 2015, and this implies growth of 26%. So as I said, despite the environment in which we try to operate so far this year, some call it rightfully as a perfect storm either -- another group as well actually, defining their situation as a perfect storm. Nevertheless, our Port division managed to maximize revenue and EBITDA creation in the first 9 months of 2016. And this increase was achieved mainly by, first of all, the inorganic growth, that is the Malta acquisition back in 2015; the increase in share of turnaround passengers in total passenger mix, and that is driven by Barcelona and Malaga; tariff adjustments made in the early months of this year; and cruise passengers in GPH ports in Turkey decreased by 39.7% as opposed to an overall decrease of 65.3% decrease in Turkey. And as I said, I'm repeating myself, thanks to a world-class security measure and unique excursion choices offered by Ege Port.

You will remember from the half year results call 3 months ago that on the commercial side, Antalya was enjoying the recovery of the marble exports to China since the last quarter of 2015. And then on the second quarter, volumes have dropped a bit due to a general investigation launched by officials in China apparently for marble imports worldwide. And in the third quarter of this year, export numbers have again started to pick up and Port Akdeniz managed to maintain similar container levels in the third quarter compared to the third quarter last year. Although volume remained flat compared to previous year, revenues increased by 7.6% and EBITDA by 14%, both in dollar terms, translating into 390 bps improvement in EBITDA margin. Container yield also increased, contributing further to our EBITDA margins.

Our core portfolio continued to grow with recent additions, and there are a few which will follow, hopefully, in the rest of the year. You will recall that we became a 44.48% shareholder of Port of Venice as one of the 4 equal partners of a strong international consortium comprised of Costa, MSC and RCCL. Our equity share in the deal was EUR 7.6 million, which is already paid in cash. And what else, one of the 7 shareholders, which is VS, Veneto Sviluppo [and the production] where the consortium will have a chance to increase its shareholding from existing 44% up to 71.5%.

Moving on, as part of the negotiations concerning a cluster of ports in Italy, as of September 30, 2016, this year, 1.5 months ago, through our wholly owned subsidiary, Global Ports has acquired 51% stake in Ravenna Terminal Passeggeri, which operates Ravenna Cruise Port. Ravenna is a favorable destination due to its geographical location. Its proximity to Venice, Bologna and San Marino as well as the reduced travel time to Florence makes it an attractive cruise destination. And we believe that Ravenna is very well positioned to benefit from the increasing traffic in the Adriatic. And with the addition of Ravenna Cruise Port, let me count all the ports we have: Barcelona, Malaga, Venice, Valetta, Lisbon, Singapore, Bar in Montenegro, Kusadasi, Bodrum, Antalya, Dubrovnik, how many did I count, 13? And total passenger figure exceeds 7 million, which once again solidify Global Ports' position as the largest cruise port operator in the world.

Moving on to the second largest group, which is actually not a group, but we just prefer to give their numbers in a consolidated basis, which is our Power -- the Gas CNG Power, that includes energy efficiency and renewable plus mining. That division combined reported revenues of TRY 170.4 million in the first 9 months, again, representing 4% increase over the same period last year. This period's increase is mainly attributable to power generation and mining. Naturelgaz, the CNG business, revenues stood at TRY 130 million as compared to TRY 138.3 million. And this decrease results from lower average gas prices and is mostly in line with our 2016 budget.

Consolidated EBITDA in this division were reported as TRY 24 million in 9 months this year compared to TRY 22.1 million in 2015. That, again, gives us an increase on a consolidated basis by 8%. The increase is mainly attributable to power and mining, as I said. EBITDA from CNG operations slightly increased compared to same period last year, adjusting for the effect of one-off asset sales last year. And the attempted coup or putsch here again had an impact on volumes where the asphalt plants, in particular, have literally suspended their operations in the third quarter.

On the ongoing projects on power generation, Tres Energy and -- working on energy efficiency has already put 28.8 megawatts out of the contracted 50 into operation. And the remaining 21.2 will start generating revenues, hopefully, by the end of this year. Likewise, the biomass projects, 17.2 megawatts, 12 plus 5.2 capacity will commence generation in the first quarter next year and the third -- later in 2017.

Quickly jumping on the Real Estate division. Division revenues were reported at TRY 18.6 million compared to TRY 8.7 million in 2015 and the segment EBITDA is TRY 12.7 million versus TRY 1.7 million. And this increase is almost fully attributable to the contribution of Van Shopping Mall, which became operational last year.

I'm checking my notes. Yes, this is a brief recap of our first 9 months results. And that's it, we can move on to your questions. Thank you for listening.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have a question from Mrs. [Payal] from [I-Bank].

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Unidentified Analyst, [2]

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This is [Payal]. I just have 2 questions on your Port segment. One, could you just give us update on the investigation by the China? Like, has the market export started to recover? That's my first question.

And my second question is on the Turkey side. What's the current status of Turkey? Do you still see the continuation of cancellations? And how do the bookings look like in next year?

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [3]

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Thank you for the question, but there are some chatter on the line. Can you just please repeat your second question?

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Unidentified Analyst, [4]

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Yes. Sure. My second question is on -- what's the status on the Turkey. So do you still see the continuation of the cancellation there? And how do you -- and how do the bookings look like in the next year?

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [5]

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Thank you. Well, starting with your first question, the investigation, well, we have kind of limited information lead from China, as you can anticipate. But just looking on the numbers, we have seen the TEU throughput in the third quarter, in particular, in -- starting from September and October -- no, no. It's -- yes, until September, we've seen some decrease in TEU throughput. Well, in this narrow audience, I don't want to give some guidance on the future numbers, but looking at October performance, we will see some -- we see the recovery in sense that the October throughputs has already beaten the budgets. So can you take it as a recovery? Maybe you can because the investigation is not going to take forever, so it should come to an end, but as I said, if I say more, I would be speculating. I don't know whether this would be an answer to your question.

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Unidentified Analyst, [6]

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Yes.

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [7]

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On the second one, again, I mean, how the 2017 outlook is would be part of the guidance, but at least, I mean, maybe I can comment on the Kusadasi Port, the Turkish cruise port. Yes, I believe it's fair to say we are expecting some cancellations that's going to continue because all the reservations are made in advance at least a year. So it's not finalized yet, the reservations. But despite the decrease, I think we will be able to maintain same levels of -- as this year, 2016.

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Unidentified Analyst, [8]

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Sure, that's helpful. Yes. Just one follow-up question on your debt. Do you have any refinancing plans for your debt, which are maturing in 2016?

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [9]

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For which one? On a consolidated basis or ports or any segment?

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Unidentified Analyst, [10]

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On consolidated basis, on the holdco level basically.

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [11]

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Holdco level? Is it -- I'm just repeating, holdco solo or on a consolidated? Because on a consolidated basis, well, I can answer to your question in both ways.

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Unidentified Analyst, [12]

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That would be helpful.

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [13]

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Okay. I mean on a consolidated basis, well, on the Port side, the chunk of the debt is from the eurobond. So we cannot refinance it until the year 2021. So there is no point in that. On Barcelona acquisition, it's a long-term finance, very cheap. There is no need to refinance it. Well, on the port side, we don't need a refinance.

On the energy side, we have just initiated the CapEx for the biomass projects, which are still greenfield. So we cannot refinance them. I don't know, we can do on holding solo level. We are working on it because we have some TRY-denominated bonds, which have a maturity of 2 to 3 years. The maturities are rather short in Turkey. So we might consider -- we are considering to refinance some of them with a longer-term and preferably euro-denominated bank loans, but that would be just for extending the maturity.

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Operator [14]

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(Operator Instructions) We have no further questions. Dear speakers, back to you for the conclusion.

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Mehmet Kerem Eser, Global Yatirim Holding Anonim Sirketi - CFO, Head of Financial Affairs & Finance Group and Finance Director [15]

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Thank you. Well, just in case you have further questions, you can always contact me, myself or our Investor Relations departments, either by phone or mail. We will be more than happy to answer your questions.

And I guess this concludes the call. Thank you all again for participating. Have a nice weekend. Have a nice afternoon. Thank you.

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Operator [16]

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This concludes today's conference call. Thank you all for your participation. You may now disconnect.