DP World positive about 'medium to long-term' outlook as global trade improves
Acquisitions helped drive up the port operator's revenue by 11% last year
Dubai-based ports operator DP World said it is "encouraged by the start to trading in 2021" and remains positive about the medium to long-term outlook despite a slide in 2020 profit amid pandemic challenges.
Profit attributable to owners after separately disclosed items, dropped 28.8 per cent to $846 million for the financial year ending December 31, 2020, from $1.19 billion in 2019, the company said in a statement on Thursday.
Revenue, however, grew 11 per cent to $8.53bn on a reported basis for the year. Acquisitions and full-year contribution from oil services company Topaz Energy & Marine and UK transport and logistics company P&O Ferries, drove revenue higher.
DP World’s maritime and logistics revenue increased by 33.2 per cent last year.
“We are delighted that our portfolio has performed better than expected and, in a year like no other, to deliver flat volumes, stable Ebitda [earnings before interest, taxes, depreciation and amortisation] and free cashflow growth is a remarkable achievement,” Sultan Bin Sulayem, group chairman and chief executive of DP World, said.
Global trade declined 9 per cent last year as the industry experienced major disruption in the first six months when movement restrictions to stem the spread of the pandemic were at their peak, a United Nations Conference on Trade and Development report said last month.
This is the biggest fall since 2009, when trade fell by 22 per cent. A recovery, however, began in the second half, with trade in the fourth quarter increasing by 8 per cent on the third quarter.
Global container volumes are estimated to have fallen by 2.1 per cent in 2020, according to consultancy Drewry Global. It estimates growth of 8.9 per cent in 2021 and 5 per cent in 2022.
DP World’s volumes have outperformed the industry by delivering 0.2 per cent growth in 2020, Mr Bin Sulayem said during a call with media and analysts. The company registered a growth in volumes in Australia, India, Africa and Brazil.
“The container industry has outperformed the gloomy double-digit decline that some predicted at the start of the pandemic, which illustrates the resilience of the market and DP World has outperformed the industry once again.”
DP World maintained a cautious outlook to global trade and said that although the “pandemic, geopolitics and trade war continues to cause some uncertainty, the medium to long-term outlook remains positive”.
We are delighted that our portfolio has performed better than expected and, in a year like no other, to deliver flat volumes, stable EBITDA and free cashflow growth is a remarkable achievement
Sultan Bin Sulayem, group chairman and chief executive of DP World
Mr Bin Sulayem said the company accelerated digital investments, which allowed it "to take advantage of the new way of doing business".
Cash from operating activities increased 17.8 per cent to $2.9bn in 2020 as the ports operator focused on managing costs to preserve cash.
Meanwhile, free cash flow (post cash tax and maintenance capital expenditure) improved 19 per cent to $2.45bn.
The company said capital expenditure reached $1.07bn in 2020. Capex this year will be slightly higher at $1.2bn with investments planned in the UAE, Jeddah in Saudi Arabia, London Gateway in the UK, Berbera in Somaliland, Sokhna in Egypt and Caucedo in the Dominican Republic.
DP World expects contributions from these additional capacities to start having an impact from 2023 to 2025, Yuvraj Narayan, group chief financial, strategy and business officer, DP World, said during the call.
“Looking ahead, we will continue to be selective on new investments and focus on the integration of our recent acquisitions to drive synergies, containing costs to protect profitability and managing growth capex to preserve cash flow,” Mr Bin Sulayem said.
DP World said its ports and terminals investment platform with CDPQ, a Canadian asset management firm that oversees Quebec’s public pension fund, expanded to $8.2bn from $3.7bn and has invested in 10 port terminals globally.
The operator’s ports and terminals subsidiary announced new investment in Senegal, Angola and Indonesia, while its logistics and maritime investment included acquisitions of India's Transworld, feeder shipping operations of Shreyas Shipping and Logistics and South Korea’s Unico Logistics.
DP World has also submitted a tender for the privatisation of Israel’s Haifa Port.
"Israel is in a strategic place between Europe and many places where we have business. It has good infrastructure and policies that encourage investment," Mr Bin Sulayem said.
He added that the ports operator is also pursuing opportunities in Israel's industrial and logistics parks.
Updated: March 18, 2021 02:39 PM