DP World throughput performance in 2015 beats industry growth of just 1.1%

DP World has reported that its consolidated container throughput (as measured by TEUs handled) increased by 2.7% in 2015, although growth on a like-for-like basis (excluding new capacity in the year) was just 1.7%. That said, these figures were still in excess of “industry growth”, which the company estimated at a paltry 1.1%. Such figures only serve to confirm the weak demand growth that the container shipping and ports sectors so clearly endured over the course of 2015.

On a regional basis, DP World’s EMEA terminals saw like-for-like throughput increase by 2.7% in the year, although it noted that volume growth softened in the second half. Australia and Americas throughput growth was -2.9% on the same basis, while Asia Pacific and Indian Subcontinent volumes contracted by 0.6%.

In financial terms, the company’s performance was seemingly healthier. Its revenues increased by 16.3% to almost $4.0bn, driven largely by its $2.6bn acquisition in the year of Economic Zones World. The key asset in that transaction was the Jebel Ali Free Zone – one of the GCC’s most important industrial and commercial hubs. The deal was significant because it appeared to stabilise the debt position of DP World’s parent company Dubai World, which almost defaulted in 2009. Furthermore, DP World’s Chief Financial Officer, Yuvraj Narayan, stated that any sale of Economic Zones World to a third party would be “seen as a strategic risk for DP World”, adding, “So we pre-empted any such move and made a compelling case to Dubai World” for the buyout. Analysts and DP World alike also highlighted the benefits of owning and operating both the port and its adjacent industrial free zone; the notion being that it enables the company to offer a more integrated supply chain offering.

Ignoring the impact of new capacity and currency fluctuations, DP World’s revenues were up by 5.6%. On the same basis, EBITDA and earnings per share increased by 5.7% and 6.2% respectively. On top of the Economic Zones World deal, the company also acquired inland terminals in Mannheim and Stuttgart in Germany as well as the Fairview Container Terminal in Prince Rupert, Canada, taking its total acquisition spending in the year to $4.0bn. An additional $1.4bn of capital expenditure in the year developed its presence further in India, Turkey, UAE and UK.

Looking forward, DP World’s major investment projects in 2016 will see the addition of further capacity at London Gateway and Jebel Ali. It expects its global gross capacity to be approximately 86m TEUs by the end of the year.

DP World’s Executive Chairman and CEO, Sultan Ahmed Bin Sulayem, commented, “We remain on course to deliver over 100 million TEU of capacity by 2020, while maintaining the existing shape of our portfolio that has a 70% exposure to origin and destination cargo and 75% exposure to faster growing markets. This positioning should enable us to deliver attractive earnings growth and shareholder value over the long term.”

Source: Transport Intelligence, 22nd March 2016

Author: David Buckby