Container volumes help to lift DP World profit 11 per cent

Gantries at the Terminal 1 in Jebel Ali port in Dubai. The company’s dividend is being increased by 2 per cent to 23.5 fils per share. Pawan Singh / The National

DP World reported an 11.7 per cent increase in net profit for 2014 on revenue 11 per cent ahead as container volumes increased across its global network of ports.

The UAE-based company, the fourth-largest ports business in the world, made attributable profits of $675 million on revenues of $3.4 billion.

Stripping out the effect of acquisitions and disposals in its global ports portfolio, and at constant currency values, profit was 25 per cent ahead and revenues 11.3 per cent better.

“Our performance in 2014, whereby we outperformed the industry, illustrates our strategy is bearing fruit,” said Sultan bin Sulayem, the DP World chairman. He was confident the group could “deliver both earnings growth and shareholder value”.

The shares, quoted on the Nasdaq Dubai exchange, rose yesterday 2.37 per cent to $19.45 on the results, which were in line with market expectations. The dividend is being increased by 2 per cent to 23.5 fils per share.

Mohammed Sharaf, the chief executive, said that volumes were 5 per cent better across the business. “The UAE achieved another record performance, while growth in Europe was strong and consistent. Asia and the Indian subcontinent recovered after a challenging 2013, while performance in the Australia and Americas region was resilient despite tougher market conditions.”

Mr Sharaf said that there was little effect from the fall in oil prices in the second half of last year. “But we use a lot of oil and this will reduce our costs. This will help us speed up progress and expansion,” he said. In Europe in particular, low energy costs should help the economies recover and we will benefit from that,” he added.

The Middle East, Europe and Africa division – dominated by the company’s home port at Jebel Ali – again produced the lion’s share of revenue and profits as the UAE achieved a record year of throughput.

Towards the end of the year DP World announced the acquisition of the business of Economic Free Zone World (EFZW), including the industrial and logistics park in Jebel Ali, in a $2.6bn deal. The deal, which closed this week, is expected to increase earnings by 15 per cent in the current year.

Despite that cash outlay, capital expenditure in the current year is expected to be between $1.4bn and $1.7bn, although it would fall back in later years to between $500m and $700m , according to Yuvraj Narayan, the chief financial officer.

The EFZW deal helped Dubai World, the group’s owner, to conclude a $10bn financial restructuring this year. Mr bin Sulayem denied that DP World shares had been used as collateral in that restructuring.

Mr Narayan said that around 20 per cent of DP World shares had been used as security in an earlier refinancing involving Ports and Free Zones World, another Dubai World company, and that this facility had been renegotiated toward the end of last year to take advantage of better financing terms.

Mr bin Sulayem declined to comment on the situation in Djibouti, where DP World has been in a dispute with the government over alleged embezzlement involving a former Djibouti official. The matter was before the arbitration courts in London, Mr bin Sulayem said, and it would be resolved there.

However, he added that DP World was in discussions “throughout Africa” with a view to opening new facilities and plans would be announced soon. “We are very interested in Senegal, and are waiting on approval from the government there,” he added.

Two new ports – the London Gateway and Brazil’s Embraport – made a contribution to the 2014 figures, and progress was made at new projects in India, Turkey and the Netherlands.

“We have made an encouraging start to 2015 and current treading is in line with group expectations,” said Mr Sharaf. “Whole macro-economic conditions and geopolitical issues across some locations remain uncertain, we believe our portfolio is well positioned to deliver volume growth in line or slightly ahead of the market this year.”[e-mail]