DP World profits rise 10% on acquisitions and global trade growth

Dubai-based company registered a 20% rise in annual revenue despite global trade war tensions

Sultan Ahmed bin Sulayem, chairman of DP World, says the UAE has not wasted its time in its approach to tackling the effects of Covid-19. Pawan Singh / The National

DP World, the global ports operator with terminals from Australia to Peru, posted a 10.2 per cent increase in annual profit driven by acquisitions and growing global trade despite trade tensions and geopolitical headwinds.

The Dubai-based company’s profit attributable to shareholders for the financial year ending March 31 increased to Dh1.3 billion from Dh1.18bn a year ago, DP World said in a statement on Thursday. Annual revenue rose 20 per cent to Dh5.6bn from Dh4.7bn a year ago driven by acquisitions such as Drydocks World and consolidation of its portfolio.

The world’s fourth-largest port operator handled 71.4 million twenty-foot equivalent units (TEU) – the measurement for container volumes – last year across its global portfolio, 1.9 per cent more than the previous year. DP World’s earnings beat the mean estimate of eight analysts for a profit of $1.17 bn and revenue of $5.3bn, according to Bloomberg data.

“Current year has started with trading in line with expectations and whilst the near-term outlook remains uncertain with the trade war and geopolitical headwinds, we expect our portfolio to remain resilient and see increased contributions from our recent acquisitions and investments,” Sultan Ahmed Bin Sulayem, DP World chairman and chief executive, said.

The company’s capital expenditure reached $908 million in 2018, below its guidance of $1.4bn million, as it contained spending in response to the uncertain trade environment, it said.

DP World, which operates the Mina Rashid port and Jebel Ali, a major transshipment port and the largest port in the UAE, plans to spend between Dh500 million and Dh1 billion to expand Jebel Ali free zone this year and is scouting for new acquisitions following a deal to buy a Chilean ports operator in January. The company has grown its portfolio with about $2.5 billion worth of acquisitions this year including of UK-based transport and logistics company P&O Ferries, which it bought in February for Dh1.5bn with the aim of expanding into shipping-related sectors.

The acquisition is expected to close in the first half of the year and be earnings-accretive in the first full year of consolidation and to meet DP World's return targets.

"These acquisitions offer strong growth opportunities and enhance DP World’s presence in the global supply chain as we continue to diversify our revenue base and look at opportunities to connect directly with the owners of cargo and aggregators of demand," said Mr Bin Sulayem.

The company reported capital expenditure of $908m, invested across the portfolio during the year, below its guidance of $1.4bn in 2018. DP World projects capital expenditure in 2019 to be up to $1.4bn, with investment planned mainly into the UAE and in its port operations in Ecuador, Somaliland, Senegal and Egypt, the company said.