DP World's third-quarter gross container volumes drop 1.6%

Ports operator says it is 'well-placed' to deliver full-year results in line with market expectations

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

DP World, the world's biggest ports operator, warned investors about an "uncertain" outlook from geopolitical tensions after reporting a drop in third-quarter shipping container volumes across its global terminals.

The Dubai company's gross container volumes fell 1.6 per cent to 17.7 million Twenty-Foot Equivalent Units (TEUs) compared to 18m a year ago amid declining volumes in Asia Pacific and India and flat growth in Dubai, DP World said in a statement to Nasdaq Dubai on Tuesday.

"Our portfolio continues to deliver a steady volume performance which is encouraging given the challenging macro backdrop caused by the global trade dispute," said Sultan bin Sulayem, DP World's chairman. "While we have seen volumes stabilising in Jebel Ali [UAE], the outlook remains uncertain given the regional geopolitics and we remain focused on profitable origin and destination cargo."

Threats from an escalating trade war between the US and China, the world's two biggest economies, are weighing on businesses and clouding the outlook for growth.

Geopolitical friction in the Middle East between the US and Iran has also led to tensions in the Strait of Hormuz, prompting a US-led coalition of countries known as the International Maritime Security Construct to commit troops, planes and ships to accompany and track vessels passing through the Arabian Gulf. The ongoing saga of the UK's exit from the European Union has also fuelled uncertainty and hurt business confidence.

DP World recorded a 4.6 per cent decline in volumes in Asia Pacific and India on a reported basis because of discontinued operations in Surabaya in Indonesia and Tianjin in China, it said.

Volumes at its Jebel Ali port in Dubai dipped 1 per cent to 3.6 million TEUs as volumes stabilised following a shift of low-margin cargo.

Consolidated volumes in the three months to September 30 grew to 10.3 million TEUS, up 12.6 per cent on a reported basis but only 0.8 per cent on a like-for-like basis, according to the company statement.

DP World handled 53.5 million TEUs across its global portfolio of container terminals in the first nine months of the year, with gross container volumes declining 0.2 per cent year-on-year on a reported basis but rising 0.7 per cent on a like-for-like basis. Consolidated volumes reached 29.7 million TEUs in the nine-month period, up 7.5 per cent on a reported basis but down 0.9 per cent on a like-for-like basis.

DP World, which operates terminals from Peru to Australia, expects full-year earnings to be in line with market expectations and said it will focus on integrating recent acquisitions, managing costs and disciplined investment.

"Overall, we remain well placed to deliver full-year market expectations," Mr Bin Sulayem said. "We are seeing positive signs of progress in our new businesses that give us encouragement for the future."

The ports operator is considering further acquisitions in the logistics and supply chain sectors to strengthen its position as a "trade enabler", its chief executive Mohamed Al Muallem told The National this week, declining to reveal a timeline for any potential deal or location of possible acquisition.

DP World continues to see further potential for growth in Africa and is still studying the US market for acquisitions, he said.

In July, DP World acquired Topaz Energy and Marine, marking its first foray into the oil and gas sector. The company has been on an investment spree since 2018 as its growth strategy evolves to include the wider logistics supply chain. It snapped up UK transport and logistics company P&O Ferries, Indian rail logistics company Kribhco Infrastructure and Chile ports operator Puertos y Logistica.