DP World profit marginally lower on improved global trade

The port operator says it is on track to meet full-year 2017 market expectations

 The ‘Traders Market’ will help Chinese, local and international manufacturers capitalise on Dubai’s strategic location as a business and trade hub. Pawan Singh / The National

DP World, the world's fourth largest terminal operator, reported a marginal decrease in its first-half 2017 net income on Thursday but said improvements in the global trading environment keep it on track to meet full-year market expectations.

The profit attributable to the shareholders reached US$606 million for the six months to June 30, which compares with a profit of $608m for the corresponding period of 2016, the firm said in a statement to Nasdaq Dubai, where its shares are traded. The income for the period was in line with Egyptian lender EFG-Hermes’ estimates.

DP World's revenue for the first six months of 2017 climbed 9.6 per cent to $2.29bn. Cash from operating activities for the period also climbed to $1bn, up from $905m recorded in the first half of 2016.

“Our balance sheet remains strong and we continue to generate high levels of cash flow, which gives us the ability to invest in the future growth of our current portfolio, and the flexibility to make new investments should the right opportunities arise,” DP World’s group chairman and chief executive, Sultan Ahmed Bin Sulayem said.

Port operators across the globe have struggled to maintain profitability on the back of slower global trade and weaker economic growth due to persistently low prices of oil. However, the trade is picking up pace and DP World said it improved, particularly, in the second quarter of this year.

The firm, which was upgraded by Fitch to BBB+ from BBB recently after both Fitch and Moody’s increased its rating by one notch in 2016, said the volumes were driven by market share gains through new shipping alliance and its performance across all three regions, where it operates, was “robust”.

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DP World subsidiary, P&O Maritime acquired Spanish Maritime Service operator Reyser in June. The firm spent $595m in capital expenditures in its key growth markets during the first six months of this year and announced investments of $170m in acquisitions of maritime businesses.

“These investments leave us well placed to deliver on our strategy to strengthen our port related services and capitalize on the significant medium to long-term growth potential of this industry,” Mr Bin Sulayem said, adding that the capital expenditure guidance for 2017 remains unchanged at $1.2bn with investments planned into home-port of Jebel Ali, the UK’s London Gateway, Canada’s Prince Rupert and Somaliland’s Berbera facilities.

The firm also reported 33.9m twenty-foot equivalent units (TEUs) of gross throughput for the first half of 2017, an 8.2 per cent increase over the same period last year. The consolidated throughput rose by 22.4 per cent to 17.87m TEUs.

“Looking ahead to the second half of the year, we expect higher levels of throughput to be maintained. Overall, the steady financial performance of the first six months leaves us confident in meeting full-year market expectations,” he said.