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DP World post double digit profit growth despite revenue drop

Dubai: DP World reported a 10.9 per cent increase in net profits to $604 million for 2013 on Thursday amid decreasing revenues and container volumes due to challenging market conditions and capacity constraints.

Revenue dropped to $3.073 billion for 2013, down 1.5 per cent on the $3.12bn reported for 2012.

Profit after separately disclosed items fell 13.4 per cent to $640, compared to $738 in 2012. DP World reported separately disclosed items of $48m, which include the $158m profit from monetisation and divestments.

DP Worlds consolidated throughput fell 3.8 per cent to 26.1m TEUs (twenty foot equivalent units), from 27.1m a year earlier.

“Revenue growth came despite muted volume growth and we faced difficult market conditions, particularly in the first half,” said DP World Group Chief Executive Mohammed Sharaf.

Overall, management was bullish on the results pointing at 26.6 per cent profit growth in like-to-like terms.

“This resilient performance illustrates that a portfolio bias towards faster growing markets and origin destination cargo proves to be the right strategy,” said DP World Chairman Sultan Ahmed Bin Sulayem.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 0.7 per cent year-on-year to 1.4bn with the adjusted EBITDA margin increasing 46 per cent.

“Throughout 2013, we continued to invest in our portfolio with capacity expenditure of $1.1bn. The majority of this was invested in our greenfield DP World London Gateway Port and the logistic park projects in the UK,” Sulayem said.

Adding that, DP World also made significant investments in flagship Jebel Ali Port and Embraport in Brazil.

DP World forecasted $1.95bn in capital expenditure this year and is set to reach its target of $3.7bn capital expenditure between 2012 and 2014.

“Our pipeline of projects remain on budget and on schedule with Jebel Ali to open an additional 4m TEU of capacity this year and our terminal in Rotterdam to open in the second half of this year with 2.3m TEU of capacity,” Sharaf said.

Share of profit from equity-accounted investees fell 37 per cent to 84 million in 2013, from 134 million the year earlier. Sharaf said that this was due to joint-venture divestments.

Sharaf said that market conditions in the Middle East, Europe and Africa were challenging with its Jebel Ali port suffering from capacity constraints despite reaching 13.6m TEUs. Consolidated throughput growth fell 1.1 per cent in the region but revenue increased by 0.6 per cent.

Consolidated throughput in the Asia Pacific and Indian Subcontinent region saw a 14.8 per cent year-on-year drop and revenue fell 22.2 per cent. The Australia and Americas region was the best performer, with positive revenue growth. Despite a 0.6 per cent decline in consolidated throughput, revenue climbed 7.5 per cent.

DP Worlds current cash flow sits at $2.571 billion and its gross debt is at $5.035bn, up from $4.752bn the year earlier.

DP Worlds next major debt maturity is a $1.5bn sukuk in 2017 and a $1.75bn conventional bond in 2037.

The DP World Board is now recommending a total dividend of $190.9 million, or 23 US cents per share. A 10 per cent increase in the ordinary dividend.