DP World’s first-half profit jumps 52% on higher revenue as global trade rebounds

Company reported net profit of $475m in the six-month period to the end of June

DP World's first-half revenue climbed 21.3 per cent year-on-year to $4.94 billion. Kamran Jebreili / AP Photo

DP World, one of the largest port operators, said its first half-year profit jumped about 52 per cent on the back of higher revenue as global trade rebounded from the coronavirus pandemic.

Total profit attributable to owners of the company for the six-month period to the end of June rose to $475 million, the company said on Thursday. Revenue climbed 21.3 per cent year-on-year to $4.94 billion.

“This significant growth once again demonstrates that we are in the right locations and a focus on the origin and destination cargo will continue to deliver the right balance between growth and resilience,” DP World Group chairman and chief executive Sultan Ahmed Bin Sulayem said.

“In recent years we have seen cargo owners respond positively to our integrated end-to-end product offering and we aim to continue with our drive to enable trade. Our recently announced acquisitions of Imperial Logistics and syncreon bring value-add capabilities in high growth verticals and markets, which will allow us to offer a more compelling set of supply chain solutions.”

Global trade is expected to improve on the back of a rebound fuelled by pent-up demand for consumer durables from advanced economies, such as cars, and the resumption of supply chains in emerging markets.

While the International Monetary Fund issued a warning last month that vaccine inequality could affect the global economic recovery, it raised its trade growth estimate to 9.7 per cent this year and 7 per cent in 2022, after a contraction of 8.3 per cent in 2020.

In July, DP World acquired US logistics firm Syncreon for a total enterprise value of $1.2bn. The company also plans to buy South Africa's Imperial Logistics for $890m. The deal is expected to close by the first quarter of 2022.

“Overall, the near-term outlook remains positive, and while we are mindful that the Covid-19 pandemic and geopolitical uncertainty could once-again disrupt the global economic recovery, we remain positive on the medium to long-term fundamentals of the industry and DP Worlds ability to continue to deliver sustainable returns,” Mr Bin Sulayem, said.

Total revenue from the Middle East, Europe and Africa rose 7.5 per cent to $3.15bn during the period, while it grew 121 per cent in the Asia Pacific and India region to $789m. Revenue from Australia and Americas climbed 27.6 per cent to $998m.

Consolidated capital expenditure in the first half of 2021 was $687m, with maintenance capital expenditure of $143m. The company expects the full-year 2021 capital expenditure to be about $1.2bn, which will be invested in different countries including the UAE, Canada, Saudi Arabia, Egypt and Angola, among others.

DP World also said its business continued to generate high levels of cash flow with operating cash flow increasing by 32.5 per cent year-on-year to $1.49bn.

“The strong cash generation combined with the well progressed capital recycling programme, leaves us well placed to meet our 2022 leverage target,” the company said.

Container volumes in the Middle East, Europe and Africa, as well as in the Asia Pacific, India, Australia and the Americas rebounded strongly in the first-half as economies continue to recover from the pandemic.

Asia Pacific and India registered the highest growth in container volumes at 19.5 per cent, followed by Australia and the Americas at 18.1 per cent and the Middle East, Europe and Africa at 8.4 per cent, according to DP World.

The UK-based Drewry Shipping Consultants expects higher container volumes at ports in 2021 as trade rebounds.

The company estimates over 10 per cent growth in global port handling in 2021, which boost total volumes to 873 million TEU (twenty foot equivalent units), around 70 million TEU higher than what was recorded in 2019 before the pandemic, Eleanor Hadland, senior analyst of ports and terminals at Drewry, said.