Financial crisis gives DP World wide berth
DP World, one of the world's largest port operators, will focus on expanding its emerging market business as global economic uncertainty clouds the outlook for trade in the second half of the year.
Stalling economic growth in the developed world has not hurt the company's performance, with 80 per cent of its revenues already from emerging markets, said Mohammed Sharaf, the chief executive.
"With our focus on the more resilient emerging markets, we still expect to deliver full-year results in line with expectations," he said yesterday.
"Historically, the second half of the year has been stronger than the first half. However, as we said in our update in July, there is uncertainty around the outlook for the global economy."
The company, which is majority owned by the government-controlled Dubai World, yesterday posted a better-than-expected rise in first-half profits after volumes rose and it booked a gain from the sale of its Australian port operations.
Despite the profits rise, the company's stock closed down 1.9 per cent at US$10.5 on Nasdaq Dubai yesterday.
Net income nearly quadrupled to $705.3 million (Dh2.59 billion) from $176.6m a year earlier, the company said. Excluding a $346m gain from the sale of its five Australian container terminals and including minority interests, profit rose 36 per cent to $281m.
Income was "close to profit levels last seen at our peak in 2008 as our container terminals have become more profitable following initiatives implemented as a result of the 2009 downturn", said Mr Sharaf.
All ports were performing better than last year, with the exception of terminals in Yemen and Egypt, which were impacted by unrest.
Global trade is expected to decelerate to 6.5 per cent this year after 14.5 per cent growth last year as the world recovered from the global recession, forecasts the World Trade Organization.
Developing economies will lead growth this year, with a 9.5 per cent rise, more than double expansion in the developed world.
"We expect to be ahead of the industry forecast," said Mr Sharaf.
Gross cargo volume rose 11 per cent to 26.2 million containers. Volume increases were led by surging trade in the Asia-Pacific, Africa and the Americas.
The first half saw the firm make progress in expanding its footprint in emerging markets. Last month, DP World bought controlling interests in two companies operating cargo terminals in Suriname, establishing a presence in the South American state for the first time. In South East Asia, Vallarpadam in India and Karachi in Pakistan both opened in the first quarter.
But Mr Sharaf said two of the biggest ports in its portfolio were both in the European trading heartland, the London Gateway and its port in Rotterdam.
"We are focusing on emerging markets as there's a need to be balanced," he said. "Going forward we are making sure there's a balance so any economic uncertainty does not impact us."
DP World sold 75 per cent of its Australian port operations for $1.5bn to Citi Infrastructure Investors and a partner last year, and its shares began trading on the London Stock Exchange in June.
First-half revenues rose 3 per cent compared with the same period last year, to $1.5bn.
Remaining one of the more profitable assets of Dubai World, the firm is well positioned with $4.1bn in cash to pay its $3bn debt payment due in October next year, it said.
It plans to spend $1.5bn in capital expenditure across this year and next, 38 per cent of which will be invested in new terminals with the remainder in existing ports.
Published: August 26, 2011 04:00 AM