DP World reports 27% first half profit rise on higher sales

Ports operator continues to diversify its revenue mix despite uncertain trade environment

DP World has restricted staff travel to China in response to the coronavirus outbreak. Bloomberg.
DP World has restricted staff travel to China in response to the coronavirus outbreak. Bloomberg.

Dubai-based ports operator DP Word reported a 27 per cent increase in profit for the first half of 2019 on the back of higher sales, which were driven by growth in non-container revenue.

Net profit attributable to shareholders of the company for the six-month period climbed to $753 million (Dh2.8 billion). Revenue climbed 32 per cent to $3.46bn, although on a like-for-like, constant currency basis the revenue increase was closer to 11 per cent, the company said in a statement Nasdaq Dubai where its shares trade. The growth was achieved despite the volume of throughput at ports remaining fairly flat as the impact of the trade war between the US and China limits global trade growth.

"This strong financial performance has been delivered in an uncertain trade environment, once again highlighting the strength of our portfolio," said DP World's chairman and chief executive, Sultan Ahmed Bin Sulayem. "We have continued to make progress on our strategy to become a trade enabler and solutions provider as we look to participate across a wider part of the supply chain."

DP World, a state-owned ports operator, operates 150 facilities in 40 countries and moves 190,000 containers per day, among the biggest port operators in the world by cargo tonnes. However, in recent years the company has sought to diversify its operations, expanding across the supply chain into logistics and, most recently, maritime oil & gas operations through its purchase last month of Topaz Energy from Oman's Renaissance Services for an enterprise value of $1.08bn.

In a presentation to investors accompanying its half-year earnings, the firm said about half of its revenue during the reporting period came from containerised activity, and half from non-containerised. In 2014, these figures were 80 per cent containerised, and 20 per cent non-containerised. Some 65 per cent of first-half revenue came from its overall ports and terminals business, 25 per cent came from its logistics and maritime arm, and 10 per cent from parks and economic zones.

Ahmed Maher, a research analyst at Egyptian investment bank EFG Hermes, said that DP World's results beat expectations, but featured a number of one-off items, including recognition of $300.8m of revenue as a result of land at Mina Rashid transferred to Emaar Properties as part of the joint venture agreement for the proposed Dh25bn development at the site.

"If you exclude the Mina Rashid deal, the numbers would have been weaker than we expected," he told The National.

DP World's shares closed 0.36 per cent lower on Thursday at $13.85 and are 34 per cent lower than the same period last year.

"The stock has never traded at such low multiples," Mr Maher said. "I think the market is pricing in all of the associated risks of geopolitical risks, the trade war risks - all of the downside, basically."

Updated: August 22, 2019 04:15 PM


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