Growth in DP World container volumes slows over first nine months

DP World is one of a handful of listed logistics and transport firms in the Gulf that could benefit from the lifting of international sanctions on Iran.

DP World had warned in August that profit would moderate in the second half because of weaker global economic growth. Kamran Jebreili / AP Photo

DP World posted a 2.5 per cent increase in container volumes in the first nine months of this year, a slower pace than in the first half owing to weak global economic growth.

The performance of the Dubai-based port operator was in line with expectations.

DP World’s consolidated throughput, or volumes at ports that the company controls, grew on a like-for-like basis to 21.9 million twenty foot equivalent units (TEUs) in the first nine months of this year compared with a year earlier, DP World said.

In the first half of this year, consolidated volume increased 3.5 per cent on a like-for-like basis to 14.38 million TEUs compared with a year-earlier period.

DP World warned in August that profit would moderate in the second half because of weak global economic growth.

DP World has posted a 22 per cent increase in net profit to Dh405 million in the first half of this year compared with a year earlier.

“Growth rates in the third quarter have softened across the portfolio and the overall macro-economic outlook remains challenging,” said Mohammed Sharaf, group chief executive.

“In the near term, we continue to focus our efforts on improving efficiency and managing costs to maintain profitability. Overall, given the solid first nine month volume performance, we remain confident of meeting full-year market expectations.”

The volume growth in the first nine months is within expectations, according to Wafaa Baddour, an analyst at the Egyptian investment bank EFG-Hermes.

“Slower growth in global trading is expected to continue impacting volume growth,” said Ms Baddour. “However, DP World is well positioned to endure lower growth in global trade and tighter spending by some GCC countries in our view.”

DP World will benefit from last year’s $2.6 billion acquisition of Economic Zones World (EZW), a free zone company in Dubai, and its capacity increases in emerging markets and selected mature markets. It will also benefit from its focus on consumer sector, making it less vulnerable to a forecast of an infrastructure spending slowdown in some Arabian Gulf markets.

DP World is forecast to post full-year net profit of Dh857m, which includes revenue from EZW, according to EFG-Hermes.

Profit last year grew 11.7 per cent to Dh675m compared with a year earlier.

Volume growth in the first nine months of this year was driven by the UAE and Europe, but performance in the Americas was weak because of economic conditions.

The UAE handled 11.9 million TEU in the first nine months, a 4 per cent increase on a year earlier.

DP World said it expects volume growth to grow next year following the acquisition of a container terminal in Canada, which closed in August.

In April, DP World said it had agreed to acquire Maher Terminal’s Fairview container terminal on Canada’s west coast for C$580m (Dh1.6bn) as it seeks to boost its capacity and capture trans-Pacific trade between Asia and North America.

DP World is targeting 100 million TEU of capacity by 2020.

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