DP World first-half profit jumps 33% on higher revenue

Global ports operator well positioned to deliver 'a steady set of full-year results' after solid six-month financial performance

DP World says it is positive on the medium to long-term outlook for global trade. Photo: Wam

Global ports operator DP World said its first-half profit jumped 33 per cent from a year earlier on higher revenue, despite a weaker container shipping market and lower sea-freight rates.

Profit attributable to owners of the company on a like-for-like basis in the six months to the end of June increased to $651 million, the Dubai-based company said in a statement on Thursday.

First-half revenue grew about 7 per cent on a like-for-like basis to $9 million, driven mainly by the strong performance of Imperial Logistics in Africa and Drydocks World in UAE, the company said. Revenue grew 14 per cent on a reported basis as the group benefitted from the full-year contribution of acquisitions, said Yuvraj Narayan, group deputy chief executive and chief financial officer.

DP World's adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) increased more than 5 per cent on a like-for-like basis to $2.6 billion in the first half of 2023, from the same period last year, it said.

"Despite facing a softer container market and weakened freight rates amid challenging economic conditions, our focus on high-margin cargo, end-to-end bespoke supply chain solutions and cost optimisation has been crucial in securing these results," said Sultan Ahmed bin Sulayem, DP World's group chairman and chief executive.

"This strategy has not only been effective during these challenging times but also lays the foundation for our sustainable long-term growth and returns."

The company's financial performance of the first six months positions the company to deliver a steady set of results for the full year, he added.

DP World's consolidated volumes in the second quarter inched up 0.1 per cent on a reported basis to 11.6 million 20-foot equivalent units (TEUs). In the first half of 2023, the ports operator handled 23 million TEUs across its global portfolio of container terminals, up 0.4 per cent year on year on a reported basis.

A strong performance from Asia Pacific's ports and terminals was a key driver of growth, while the Americas and Europe were softer due to the weaker economic environment, the company said.

"While the near-term trade outlook may be uncertain due to macroeconomic and geopolitical factors, the solid financial performance of the first six months positions us well to deliver a steady set of full-year results," Mr Bin Sulayem said.

"We remain optimistic about the medium to long-term prospects of the industry and DP World’s capacity to consistently generate sustainable returns.”

Global container throughput is forecast to grow to 932 million TEUs by 2025, up from 858 million TEUs in 2021, according to maritime research and consulting services firm Drewry.

The global shipping industry is currently grappling with slowing economic growth, inflationary pressures, higher interest rates, currency fluctuations and geopolitical tensions.

World trade growth is expected to decline to 2 per cent in 2023, from 5.2 per cent in 2022, before rising to 3.7 per cent in 2024, according to the International Monetary Fund.

This is well below the 2000-2019 average of 4.9 per cent and reflects slowing global demand, a move towards domestic services, the lagged effects of US dollar appreciation and rising trade barriers, the Washington-based lender said in its latest global economic outlook in July.

DP World said its net cash generated from operating activities was $1.95 billion in the first half of 2023, compared with $1.93 billion in the same period last year.

Net debt was at $15.8 billion at the end of June.

Net financing costs for the six months increased to $505 million compared with $373 million in the same period for the previous year, mainly due to higher average debt and increase in effective interest rates during the period.

The company's capital expenditure guidance for 2023 is for approximately $2 billion to be invested in UAE, Jeddah, London Gateway, Dakar, Callao in Peru and DPW Logistics in South Africa.

"Our balance sheet remains robust, and we continue to generate high levels of cash flow, which provides us the flexibility to invest in the growth of our existing portfolio and new investment opportunities when they arise," the group chairman said.