DP World profits rise

DP World said net profits rose 48 per cent last year to US$621 million (Dh2.28 billion) but predicted tougher times this year as container volumes in January and February fell 8 per cent across its global network. The world's fourth-largest ports operator sees volumes disappearing "on a daily basis" and the "worst-case scenario" is returning to 2007 levels, Mohammed Sharaf, the chief executive of DP World, said yesterday. "The volume deceleration we saw in the last quarter of 2008 has continued into early 2009 and shows little sign of easing in the foreseeable future." Gloomy conditions in the maritime trade industry is forcing the company to balance short-term cost-cutting needs with its ambitious expansion plans. DP World has frozen many of its expansion projects and laid off a "minimal" number of workers at its port in Southampton, UK, and elsewhere, officials said. The company is working to cut more than 3 per cent of its fixed costs while at the same time investing as much as $850m this year across its 49 terminals in 27 countries. Projects in the final stages of completion, including upgrades at DP World ports in India (Vallarpadam), Vietnam, Pakistan and Peru, will go forward, Mr Sharaf said. Despite the downturn, the company said it was faring better than its global competitors. Container volumes across the company's network fell in January and February with ports in Europe and east Asia the worst hit, with "most of the developed regions reporting double-digit declines in volumes", Mr Sharaf said. By contrast, PSA, the Singapore-based global container terminal operator, said box volumes dropped 20 per cent across its networkin January and February. DP World was able to post positive results last year despite the fourth-quarter downturn, when trade between Asia and the West stalled. Its revenues increased by 20 per cent to $3.2bn, lifted by a 15 per cent rise in cargo volumes to 27.7 million standard-size containers. Its cash position rose 12 per cent to $1.07bn while earnings per share jumped 53 per cent to 3.45 cents from 2.26 cents. Kareem Murad, an analyst at Shuaa Capital, said the results beat expectations and were helped by DP World raising tariffs last year. However, he warned of a potentially "substantial drop" in box volumes for DP World this year. DP World said it was considering new options to address the fall in its share price, which hit a low of $0.17 on March 5 after a high of $1.25 on Jan 4 last year. Shares rose 8.7 per cent on yesterday's news, to $0.25 a share. "Over the next few months, the board will evaluate all available options to address its continued disappointment with the market's valuation of the company," it said. * with agencies igale@thenational.ae