DP World profit gain exceeds forecasts after Dubai free zone acquisition

DP World’s net profit rose by 30.7 per cent last year, beating analyst expectations, thanks to the port operator’s acquisition of a free zone in Dubai in 2014 and growth in throughput, the company said. The company expects growth this year despite uncertain market conditions. The shares rose 8.8 per cent to US$19 on the […]

DP World’s net profit rose by 30.7 per cent last year, beating analyst expectations, thanks to the port operator’s acquisition of a free zone in Dubai in 2014 and growth in throughput, the company said.

The company expects growth this year despite uncertain market conditions. The shares rose 8.8 per cent to US$19 on the Nasdaq Dubai.

“While 2016 is expected to be another challenging year for global trade, we have made an encouraging start to the year and current trading is in line with group expectations,” said Sultan bin Sulayem, the chairman and chief executive.

“Macroeconomic conditions and geopolitical issues across some locations remain uncertain but we believe our portfolio is well positioned to deliver volume growth ahead of the market this year.”

DP World’s net profit attributable to equity holders before separately disclosed items increased to US$883 million from $675m in 2014, it said. Revenue rose by 16.3 per cent to $3.9 billion from $3.4bn.

The results beat Cairo-based investment bank EFG Hermes’ forecast of net profit attributable to equity holders before separately disclosed items of $839m because of better margins, said Wafaa Baddour, an analyst.

“This financial performance has been achieved despite uncertain market conditions, which once again demonstrates the well-diversified and resilient nature of our portfolio with its focus on high growth markets,” said Mr bin Sulayem.

The economic slowdown in China did not deter DP World from maintaining its growth in the market last year, while Europe and Brazil grew despite their own economic troubles, said Mr bin Sulayem. Globally, the company’s concentration on destination and origin cargo protects it from market volatility, he said.

DP World is also still seeking entry into Iran, Mr bin Sulayem said. “Iran is an important country and we are watching the development that is happening there.”

DP World’s consolidated throughput rose last year on a like-for-like basis by 1.7 per cent to 29 million containers from 28.3 million units in 2014. Consolidated throughput refers to volumes at ports that the company controls.

The port operator plans to spend between $1.2bn and $1.4bn this year to expand its terminals in Jebel Ali in Dubai, the Economic Zones World (EZW) free zone in Jebel Ali, London Gateway in the UK and Prince Rupert in British Columbia, Canada.

The group spent $1.4bn on capital expenditure last year, in addition to $4bn on acquisitions, which included inland terminals in Mannheim and Stuttgart as well as the Fairview Container Terminal in Prince Rupert.

DP World expects to have about 86 million units of gross global capacity by the end of this year, up from 79.6 million units at the end of last year.

EFG Hermes expects DP World to post this year a net profit attributed to equity owners before separately disclosed items of $907.6m, as it expects the company’s consolidated container volumes to grow by 3 per cent.

The consolidation of EZW and Fairview for a full year and contributions from recently added capacity in Rotterdam, Mumbai and Yarimca in Turkey will help boost profit this year, said Ms Baddour.

DP World acquired EZW from Dubai World in 2014 for $2.6bn. Dubai World is the parent company of DP World.

The port operator has also acquired a second terminal in Canada for C$580m (Dh1.6bn) as it seeks to boost its capacity and capture trans-Pacific trade between Asia and North America.

DP World will spend $1.6bn on a new terminal at its flagship Jebel Ali port in a major boost for trade through Dubai. That will increase capacity by 16 per cent by 2018 and cater to future growth in the region.

dalsaadi@thenational.ae

Source: Business

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