Abu Dhabi: Having posted a 50 per cent rise in net profit for the first half of this year, DP World expects a good second half with financial performance matching that of the first half and improvement in throughput cargo levels.
“Looking ahead to the second half of the year, 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,” said DP World Group Chairman and CEO, Sultan Ahmad Bin Sulayem in a statement.
“Overall, the strong financial performance of the first six months leaves us well placed to meet full-year market expectations.”
One of the world’s largest port operators on Thursday announced that the net profit in the first half of 2016 rested at $608 million, up 50 per cent from $405 million during the same period last year.
DELAYING EXPANSION:
The company also said it is delaying the expansion of its core facility, Jebel Ali Port, due to softer market conditions. Plans to add 1.5 million TEUs (twenty foot equivalent units) capacity to Terminal 3 will be delayed into 2017. It added that it would also slow down the expansion of Terminal 4. The news comes after DP World announced in July last year that it would invest $1.6 billion in Terminal 4.
GROWTH:
According to the company, growth outside of the UAE in the first half was strong with Europe continuing to outperform, mainly driven by the ramp up at London Gateway.
Volumes in the UAE were down by 6 per cent at 7.4 million TEUs (twenty foot equivalent units), and revenues in the Middle East, Europe, Africa region grew 12.1 per cent to $1,542 million, aided by the acquisition of Jebel Ali Free Zone.
The company said market conditions in the Asia Pacific and Indian subcontinent region were generally positive.
There was a volume growth of 6.6 per cent in Asia Pacific and Indian subcontinent driven by the Indian subcontinent terminals and a favourable trading environment.
On the other hand, Australia and Americas has been challenging and volatile currency and weaker commodity prices led to softer economic growth in this region. Reported volumes in the region grew by 19.4 per cent, benefiting from the inclusion of Prince Rupert in Canada from August 2015 onwards, the company said. Revenues grew by 2.5 per cent to $331 million.
The company is still assessing the impact of Brexit on its operations in the UK. DP World operates two ports in the UK including London Gateway and Southampton.
“Ports will be affected but it is too early to say what the full impact will be,” Bin Sulayem said in a conference call with the media without giving further details.
DP World signed Memorandum of Understanding with the US-based company Hyperloop One earlier this week to explore the possibility of movement of cargo from Jebel Ali port to inland container depot in Dubai using Hyperloop tube.
On transportation of cargo using Hyperloop system at Jebel Ali Port, he said they are undertaking a study to understand the efficiency of the system and it will not take more than 90 days to finish the study. “There is a need to move cargo. The system is innovative and in line with our ambitions and growth plans,” Bin Sulayem said.
Asked why shares of the company are not doing well despite it delvering profits, Yuvraj Narayan, group chief financial officer, told reporters on a conference call on Thursday that they are concerned but left it to the market to determine the share prices. “We remain focused on delivering business and leave the other market participants to determine what the market price should be. We make sure that we perform and deliver consistent numbers at all times,” Narayan said.
The shares of DP World went up by 0.96 per cent to close at $18.9 on Thursday on Nasdaq Dubai.
