DP World's net profit more than doubles to $287m

Dubai: DP World, the world's fourth largest port operator, boosted first-half operating earnings 44 per cent, helped by increased volume of trade in Middle East and Asia and improved productivity in the newly acquired African operations.

Net profit from continuing operations more than doubled to $287 million from $129 million a year earlier. Earnings per share also more than doubled to 1.67 cent compared to 0.78 cents last year.

"DP World's earnings came in higher than our expectations and higher than the market's expectations," said Rami Sidani, head of Mena funds, Schroders Investment Management, Dubai. "Not only it saw a growth in its TEU, [cargo volume], but more importantly, the growth in revenue outpaced the growth in TEU, which reflects a strong pricing power."

But concerns remain, he said. "The risk pertains to the most profitable operation in the region [at] Jebel Ali, which is faced with high inflation. But we are happy to see that the company is able to pass on any increase in costs to its customers," Sidani said.

Two new terminals at Dakar, Senegal, and Sokhna, Egypt, were added to the portfolio in the first half of the year.

Revenue for the consolidated ports portfolio was $1.59 billion against $1.20 billion in 2007, an increase of 32 per cent. Operating earnings jumped 44 per cent to $652 million from $454 million a year earlier.

Tough environment

"These results are particularly pleasing in light of the fact that the industry overall has seen a slowdown in volume growth in the Asia-Pacific region and we are operating in a more challenging global financial and economic environment," DP World Chief Executive Mohammad Sharaf said in a statement.

DP World shares rose 7.5 per cent to close at 0.86 cents yesterday, Prior to the announcement of the results, its shares were down 34 per cent this year.

"The problem with the stock is [that] although it is a great growth story, with the current uncertainty in the markets investors are not willing to pay for future growth," Sidani said.