Sunday, Sep 01, 2013
(This story was originally published on Thursday.)
DUBAI (Zawya Dow Jones)--Port operator DP World (DPW.NDB) saw a further decline in container volumes in the first half of the year amid sluggish global trade and continuing economic uncertainty, but the Dubai-based company said profits are on the rise and it is well-positioned for growth.
Like other operators, DP World has seen a drop in cargo volumes passing through its terminals as global trade slows. In response, the company has shifted focus in recent years to better capture fast-growing trade in emerging markets and sold off terminals in developed countries, including most of its port interests in Australia in 2010.
"We continue to actively manage our portfolio, having monetised assets in Hong Kong this year, with an expectation to recycle this cash into projects that will deliver a higher return on our capital," Chief Executive Mohammed Sharaf said in a statement.
First-half net profit rose 9.1% to $264 million from $242 million a year earlier, DP World said. Those profits excluded separately disclosed items of $151 million, which it said related mostly to profit on the sale of businesses. DP World sold container terminal and logistics interests in Hong Kong in March for $742 million as part of its reorganization.
DP World said last month that first-half container handling volumes dropped 5.8% to 26.6 million 20-foot-equivalent units because of tough market conditions. After adjusting for changes in container-handling operations, the volume decline was 2.1%, DP World said. DP World's portfolio of consolidated terminals handled 12.8 million TEU during the first half, a decline of 5.7% from the year before period.
With container volumes down, first-half revenues were $1.51 billion, a 1.3% year-on-year fall. The decline came amid a challenging macroeconomic environment and a slowdown in China and India that affected DP World's businesses there, Mr. Sharaf said. First-half revenues in the Asia Pacific and Indian Subcontinent region fell 17% year-on-year.
On a like-for-like basis, however, overall revenues rose 2.4%, which Mr. Sharaf attributed to a strategy of focusing on higher-margin cargo routes. Revenues in Australia and the Americas, meanwhile, were up 9.9% in the first half. Volumes are expected to improve in the second half, Mr. Sharaf added, a tentative sign of a rebound for the shipping industry after several years of struggle.
A.P. Moller-Maersk A/S (MAERSK-B.KO), the Danish operator of the world's largest container shipping fleet, reported better-than-expected second-quarter results earlier this month on higher prices and profits at its container-shipping subsidiary Maersk Line.
DP World is a subsidiary of Dubai World, owned by the Dubai government. It is based in Dubai's Jebel Ali port and operates more than 65 ports worldwide.
DP World made $544 million of new investments in the first half, it said, part of a $3.7 billion capital expenditure program between 2012 and 2014.
Net finance cost for the first half was $154.6 million, it said, down from $162.9 million last year. Net debt stood at $2.4 billion at the end of the first half, while cash balances increased to $2.5 billion, mainly because of the sale of the Hong Kong assets.
Write to Asa Fitch at asa.fitch@wsj.com
Copyright (c) 2013 Dow Jones & Co.
(END) Dow Jones Newswires
01-09-13 0409GMT
