DP World first-half profit jumps 52% to record $721m

Revenue grew 60% on a reported basis to $7.9bn, fuelled by acquisitions and the strong performance of feedering services

Terminal tractors line up to load containers into a cargo ship at DP World's Terminal 2 at Jebel Ali Port in Dubai. Reuters

DP World, one of the world's largest port operators, announced a record profit in the first half of 2022, driven by growth in cargo, leaving it well positioned to deliver better full-year results.

Profit attributable to owners of the company, before separately disclosed items, increased 52 per cent in the first six months to June 30 to $721 million from $475m in the first half of 2021, the Dubai-based company said in a statement on Thursday.

Revenue grew 60 per cent on a reported basis to $7.9 billion, fuelled by acquisitions and the strong performance of feedering services, the company said. Container revenue per 20-foot equivalent unit (TEU) increased more than 9 per cent, driven by higher demand for storage.

“This significant growth demonstrates that our strategy to focus on high margin cargo and to offer customised supply chain solutions will provide sustainable returns in the long term”, Sultan Ahmed Bin Sulayem, DP World's group chairman and chief executive, said.

“Overall, the strong first-half performance leaves us well placed to deliver improved full-year results.”

Freight rates have surged on a shortage of new cargo vessels and congestion at ports globally caused by higher e-commerce demand and pandemic-related supply chain bottlenecks.

DP World's adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) grew to $2.4bn in the first half, up from $1.8bn in the prior-year period, it said.

Cash from operating activities increased 29.6 per cent year-on-year to $1.9bn, while capital expenditure during the reporting period rose to $741m from $687m in 2021as it invested across its existing portfolio.

The company handled 39.5 million TEU across its global portfolio of container terminals in the first half of this year, up more than 2 per cent annually, as global trade picked up, it said last month.

However, DP World expects overall growth in the second half of the year to “moderate” as the near-term outlook remains uncertain because of the “more challenging macro and geopolitical environment”.

“Nevertheless, we remain positive on the medium to long-term fundamentals of the industry and DP World's ability to continue to deliver sustainable returns,” Mr Bin Sulayem said.

DP World's warning comes amid fears about a global economic recession due to higher inflation and the wide-ranging economic impact of the Russia-Ukraine war.

Global trade growth in 2022 and 2023 will likely slow by more than previously expected as a result of the decline in global demand and supply chain problems, the International Monetary Fund said last month in its World Economic Outlook update.

World trade volume (goods and services) is forecast to grow 4.1 per cent this year after expanding 10.1 per cent in 2021, according to the IMF. Growth is estimated to decline to 3.2 per cent in 2023.

The dollar’s appreciation in 2022 by about 5 per cent as of June compared with December 2021 is also likely to have slowed world trade growth, “considering the dollar’s dominant role in trade invoicing as well as negative financial balance sheet effects on demand and imports in countries with dollar-denominated liabilities”, the fund said.

The IMF cut its growth forecast for the global economy for the second time this year, due to Russia’s war in Ukraine which has exacerbated inflationary pressures and derailed the momentum of the recovery from the Covid-19 pandemic and a slowdown in China.

It now projects global growth at 3.2 per cent in 2022 and 2.9 per cent in 2023, revised down 0.4 and 0.7 percentage points from its April forecasts, respectively. This compares with a 6.1 per cent expansion last year.