DP World (Nasdaq Dubai: DPW), the fourth-largest marine terminal operator globally, reported strong increases in revenue and earnings, thanks largely to its maritime and logistics businesses. But container volumes remain down as global trade slows.
The Dubai-based company reported revenue of $3.46 billion for the first half of 2019, up 32% from the year-earlier period. Excluding the effects of exchange rates and acquisitions, revenue was up 11% for the period. It said the growth stemmed from acquisitions and “non-containerized” revenue.
Adjusted operating profit of $1.6 billion was up 22% for the period, while net profit of $753 million was up 20%.
DP World, which has stakes in about 70 marine terminals globally including Prince Rupert in Canada, is becoming more active in short-sea shipping. This year it bought P&O Ferries, which provides ferry services between the U.K. and continental Europe, and Topaz Marine & Energy, an operator of offshore supply vessels for the energy industry.
The company’s biggest splash in short-sea shipping was the 2018 acquisition of Denmark’s Unifeeder, which shuttles containers between ports in Europe. DP World said Unifeeder’s results are “in line with expectations and continuing to benefit from structural changes in the market.”
Chief Executive Sultan Ahmed Bin Sulayem said DP World’s goal is “to participate across a wider part of the supply chain. (and) to connect directly with customers to offer logistics solutions and remove inefficiencies in the supply chain to accelerate trade.”
He said the company is seeing “positive signs of progress in our new businesses that give us encouragement for the future.”
The company also highlighted its growing presence in India’s logistics market, where it has a stake in three inland warehouses and free-trade-zone warehouse at the country’s busiest port.
The new businesses caused operating profit margins to weaken to 46.5% from 50.3% a year earlier. Nevertheless, Bin Sulayem was optimistic about the company’s path.
“While the near-term trade outlook remains uncertain with global trade disputes and regional geopolitics causing uncertainty to the container market, the strong financial performance of the first six months also leaves us well placed to deliver full-year results slightly ahead of market expectations,” he said.
As for marine terminals, DP World said container throughput across all its terminals was up 0.5% to 35.8 million twenty-foot equivalent units (TEUs).
It said strong performance in Asia-Pacific, India and Africa drove the second-quarter growth.
It also added terminal assets in Chile and Canada’s Fraser Surrey Docks. And it opened the only deep water port in Ecuador with annual capacity of 750,000 TEUs.
Those gains were offset by lower volumes in the United Arab Emirates and Australia.
But DP World’s home base is dealing with a recession this year due to the effects of low oil prices and declining employment. During the third quarter, DP World had to deal with periodic walkouts by Australian longshoremen.
DP World also remains mired in a dispute with the African nation of Djibouti over its seizure of the Doraleh Container Terminal. DP World has said Djibouti continues to disregard international adjudications to return the one-third stake owned by DP World.
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