DP World earnings surge 50% in first half

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DP-world-35Container port and supply chain operator DP World announced a 50% increase in profit in the first half of 2016 on strong containerized revenue for the period ended June 30, 2016.

The Dubai, UAE-based company said in a statement that earnings for the period were recorded at US$608 million, a 50.2% increase before separately disclosed items on a reported basis and a 4.3% growth on a like-for-like basis at constant currency, with the profit hike buttressed by a strong adjusted EBITDA growth.

The reported revenue grew 10.2%, adjusted EBITDA increased by 27.2%, and adjusted  EBITDA margin reached a record 56.2%. On a like-for-like basis, revenue grew 2.5%, adjusted EBITDA increased by 6.6%, and adjusted EBITDA margin was 51.8%, said the firm.

DP World group chairman and CEO Sultan Ahmed Bin Sulayem said, “This financial performance has been achieved despite uncertain market conditions, which once again demonstrates the resilient nature of our portfolio.”

Revenue for the January-June period rose to $2.09 billion, supported by the acquisitions of Jebel Ali Free Zone in the UAE and Prince Rupert  in Canada. The like-for-like revenue increase of 2.5% was driven by a 4% increase in total containerized revenue, as revenue per TEU grew 5.4% on a like-for-like basis. Non-container revenue, meantime, decreased by 0.9% on a like-for-like basis and increased by 17.9% on a reported basis.

Adjusted EBITDA amounted to $1.18 billion and adjusted EBITDA margin reached a new high of 56.2%, reflecting the Jebel Ali Free Zone acquisition and increased contribution from other higher margin locations.

The company said it continues to invest in high-quality long-term assets with strong supply and demand dynamics. Capital expenditure for the first half totaled $586 million invested across the portfolio.

The organization’s capital expenditure guidance for 2016 remains unchanged at between $1.2 and $1.4 billion, with investments planned into Jebel Ali, Jebel Ali Free Zone, London Gateway (UK), Prince Rupert, JNP Mumbai (India), and Yarimca (Turkey).

“We will maintain the existing shape of our ports portfolio that has a 70% exposure to origin and destination cargo and 75% exposure to faster growing markets. This positioning will enable us to deliver both earnings growth and shareholder value over the long term,” said the logistics service group.

Meanwhile, on business prospects for the rest of the year, Sulayem said the global trade environment remains challenging, including for Jebel Ali port. “The outlook for trade growth remains uncertain; however, we believe our portfolio is well positioned to continue to outperform the market. We remain focused on delivering relevant new capacity in the right markets through disciplined investment, improving efficiencies and managing costs to drive profitability.”

For the second half of the year, he added, “we expect throughput performance to improve, and like-for-like financial performance (excluding one-off items and foreign exchange movements) to be similar to the first half. Overall, the strong financial performance of the first six months leaves us well placed to meet full-year market expectations.”