Dubai: Ports operator DP World will focus on expanding its presence in emerging markets in 2014 but is it unlikely to dilute holdings in assets as it did in 2012, according to an industry analyst.
In 2012 DP World Australia, in which DP World has a 25 per cent shareholding, sold all of its 60 per cent shareholding in Adelaide Container Terminal.
Instead, Devanshu Saluja, Lead Equity Analyst at Drewry Shipping Consultants in India, told Gulf News the Dubai-based global terminal operator would focus on countries like India and Brazil.
“It is pretty clear they are looking at areas with higher growth and throughput,” he said.
DP World has an existing presence in India and in 2013 began initial operations at the 1.1 million TEU (twenty-foot equivalent units) Embraport in Brazil.
A TEU is a unit of cargo capacity based on the on a 20-foot-long (6.1 metre) container. The standard-sized metal box is used to describe the capacity of container ships and container terminals.
While DP World is keenly watching emerging markets and looking for higher margin origin and destination cargo business, Saluja said DP World will hang onto its Western Europe assets like London Gateway, which only came online in 2013.
Western Europe does not have the high growth factor of emerging markets but with the economy turning around, throughput levels are expected to increase. And with a shortage of capacity in the United Kingdom to handle the larger ships, DP World will stay put.
Locally, in June 2013, DP World added 1 million TEU in capacity at flagship facility Jebel Ali in Dubai by extending Container Terminal 2 by 400 metres, taking the total capacity to 15 million TEUs. A further 4 million TEUs are set to be added this year when Container Terminal 3 opens taking the ports total capacity to 19 million TEUs.
While end-of-year figures are not yet available, the UAE region, which includes Fujairah Port, handled 3.6 million TEUs in the third quarter, representing 5.4 per cent growth.
“We expect second half 2013 to be stronger than the first half, with operations commencing at new locations such as London Gateway and Embraport, along with an increase in volumes at Jebel Ali,” Saluja said.
As DP World looks to grow its business in 2014, Mohammad Sharaf, DP World Group CEO, told Gulf News in an e-mailed statement that it will also follow the public and private sector government mandate to develop mobile technology in line with the UAE’s m-government strategy.
Earlier this year, Sharaf stated that DP World’s target is for gross like-for-like volumes in line with 2013.
With 2013 at a close, but final figures not yet available, it looks like DP World will come off the back of a solid year. The company’s stock has run up around 50 per cent in 2013, which Saluja said is fairly valued at its current level.
Saluja said Drewry is projecting $3.22 billion in revenue and $1.47 billion in earnings before interest, taxes, depreciation and amortisation (Ebitda) for 2013. For 2014, it projects $3.53 billion in revenue, and $1.63 billion in Ebitda.
