Booming global trade, especially in Asia, helped DP World, the UAE’s global ports operator, to report a 42 per cent increase in profits at the halfway stage, ahead of most experts’ expectations.
With some signs of recovery in European business, DPW made US$372 million in the six months to June 30, compared to $295m in the first half of last year. The mid-way result reflected a big improvement in margins, on the back of an 11 per cent revenue increase to $13 billion.
Jebel Ali, the group’s headquarters, was again the mainstay of the business. Mohammed Sharaf, the chief executive, said that the economy in the UAE and the wider region was “robust”, and that growth was driven by tourism and logistics, with the benefits of the Expo 2020 business exhibition still to come.
However, he warned that “continued geopolitical issues may result in challenges as the year progresses”.
Mr Sharaf added: “Historically our second half throughput performance has been stronger than the first and we expect that trend to continue. The solid financial performance of the first six months is reassuring and we are confident of meeting full-year market expectations.”
The company, which is 80 per cent owned by the Government of Dubai via the Dubai World conglomerate, reports its financial results on a like-for-like basis, adjusting for changes in the core business and foreign exchange volatility. Before these adjustments, the rate of growth in the first half was 26 per cent, on a revenue increase of 8.5 per cent.
The company is financially strong. It raised $1bn in the period through a convertible bond, and increased its revolving credit facility to $3bn. “These actions have left us with the flexibility to support growth in our existing business, and expand capacity in line with market demand. Moreover, we have the financial resources to add to our portfolio should favourable assets at attractive prices become available,” Mr Sharaf said.
He added: “The substantial investment programme that we initiated in 2012 is starting to bear fruit as new capacity aids in the delivery of stronger top and bottom line growth. We have made good progress at our recently opened greenfield projects in Embraport, Brazil and London Gateway, and we look forward to adding a further 8 million TEU [container capacity units] to our portfolio over the next two years, providing further opportunity for growth.
“Crucially, our balance sheet remains strong and we continue to generate high levels of cashflow, 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 as well as delivering enhanced returns to shareholders over the medium term,” he added.
Sultan bin Sulayem, the DPW chairman, said: “The addition of new capacity and a pick-up in global trade has resulted in a return to robust volume growth, which has translated into an impressive financial performance.”
However, DP World shares – traded on the Nasdaq Dubai and London Stock Exchange markets – fell by about 4 per cent in the course of the day on big trading volumes. One analyst said: “The half-year figures are fine, and are not the driver of the volumes or price movement. I believe there has been a programmed account seller in the market in the course of the day.”
The share volatility also coincided with a reweighting of the UAE market index by MSCI, the compilers. DP World is one of the largest constituents of the index.
fkane@thenational.ae
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