DP World’s first-half profits slip

The Dubai-based container terminal operator saw earnings fall despite rising revenues and throughput.    DP World saw its profits attributable to owners of the company slip 2.1 percent in the first half of 2018 to $593 million, according to the Dubai-based container terminal operator’s most recent financial statements.
   The company reported basic earnings per share of $0.72 compared with $0.73 per share in the same six-month period last year, despite revenues rising 14.4 percent to $2.63 billion.
   DP World attributed the growth in revenues primarily to increased volumes across all three of its reporting regions and positive contributions from new acquisitions, including Drydocks World LLC, Dubai Maritime City and Cosmos Agencia Marítima.
   Gross volumes from all terminals in which DP World has a stake grew 4.8 percent year-over-year to 35.6 million TEUs in the first half, while consolidated throughput for terminals in which the company has a controlling share was up 4 percent to 18.6 million TEUs.
   DP World blamed the decline in profits in part on the rescinding of a concession from the Republic of Djibouti to operate the Doraleh Container Terminal in the country’s capital city.
   The government has said the agreement, granted to DP World in 2006, “contained severe irregularities and threatened the national interest and sovereignty of Djibouti,” leading it to terminate the concession in February.
   The London Court of International Arbitration earlier this month ruled that Djibouti seized the terminal using “devices…to evade Djibouti’s contractual obligations,” but the government has insisted that its termination of the contract with DP World “conforms to international law.”
   DP World also made a sizable splash in the container shipping market during the first half, agreeing to acquire 100 percent of Aarhus, Denmark-based Unifeeder Group, the largest feeder and shortsea container carrier in Europe, for 660 million euros (U.S. $765.4 million).
   Although the deal is still subject to regulatory approval, the integration of Unifeeder would gives DP World an entirely new line of business within the global supply chain.
   With a fleet of 60 short-term chartered vessels carrying roughly 3.2 million TEUs per year to and from European cargo hubs and regional ports, Unifeeder reported annual revenues of 510 million euros in 2017 and DP World expects the acquisition to be earnings accretive within the first full year after completion.
   Sultan Ahmed Bin Sulayem, DP World group chairman and CEO, said the “robust” first-half results were “delivered in an uncertain trade environment, once again highlighting our operational excellence and the resilience of our portfolio.
   “We have made good progress in delivering our strategy of strengthening our portfolio of complementary and port related business with approximately $1,400 million 8 worth of acquisitions announced recently,” he said. “These acquisitions offer strong growth opportunities and enhance DP World’s presence in the global supply chain as we continue to diversify our revenue base and look at opportunities to connect directly with the owners of cargo and aggregators of demand.
   “Going forward, we aim to integrate our new acquisitions and we continue to extend our core business into port-related, maritime, transportation and logistics sectors with the objective of removing inefficiencies in global trade, improving the quality of our earnings and driving returns.”
   Looking ahead to the remainder of the year, Sulayem said, “The near-term trade outlook remains uncertain with recent changes in trade policies and geopolitical headwinds in some regions continuing to pose uncertainty to the container market. However, the robust financial performance of the first six months also leaves us well placed for 2018 and we expect to see increased contributions from our recent investments in the second half of the year.”