DP World posts $333m profit

The company working for listing on LSE. To change trading denomination to dirhams. (AP)

DP World yesterday announced a 46.3-per cent slide in profits, from $621 million (Dh2.28 billion) in 2008 to $333m in 2009. Revenues also dropped to $2.82bn from $3.28bn in 2008.

The company said the results are better-than-expected and reflect management action and the continued investment in new terminals, despite the challenging macroeconomic environment and the decline in global trade in 2009.

The company said it has started work towards listing on the London Stock Exchange (LSE) and planning to change the currency denomination of trading to dirhams.

Speaking to reporters, Mohammed Sharaf, CEO of DP World, said: "The results are an excellent achievement for DP World given the significant reduction in global trade and the uncertainty surrounding the operating environment throughout the year."

The group reported a substantially smaller decline in volumes than the industry, maintaining higher utilisation rates.

The Ebitda reported is in excess of $1bn and profits in excess of $300m.

Gross cash generation from operating activities remained very strong at $992m.

In a statement, DP World Chairman Sultan Ahmed bin Sulayem said: "In an industry such as ours, where the average terminal concession is granted for in excess of 25 years, we must continue to focus on, and invest for the longer term."

In 2009, the management reviewed "all of our operations and drive through structural cost improvements and operational efficiencies. Tough decisions were taken, the results of which will ensure we are better placed to deliver profitable growth for the future", he said.

Starting from the second half, the company adopted several restructuring measures which reduced fixed costs in excess of seven per cent. "We have been focused on long-term restructuring costs and winning market share through improved efficiencies for customers. Of which three to four per cent will be carried forward into future years," he added.

Sharaf said tough decisions were taken and implemented and these results reflect those decisions. "Our stronger second half performance reflects the hard work of our management teams, with higher volumes, improved utilisation rates across the majority of our terminals and better-than-expected cost reductions. Taken together, these led to an improvement in underlying Ebitda margins in the second half, which will provide a solid platform to build on as we go into 2010."

Meanwhile, revenue for the consolidated portfolio in 2009 was $2,821m against the 2008 revenue for the same period of $3,283m, a decline of 14 per cent as a result of the eight per cent decline in container volumes and a 29 per cent decline in non-container revenue.

DP World's share of net profit from joint ventures and associates was $71m, a decrease of 39 per cent over the same period last year, reflecting the decline in volumes in Asia and Europe where the majority of this portfolio is focused and where volume declines have been most significant.

The company's total assets increased to $19bn from $15bn primarily as a result of terminal additions during the period and the increase in bank balances and cash to $2.9bn following the drawdown of cash from our 2012 revolving credit facility during the year.

Total equity has increased to $8bn from $7bn in 2008 as the adverse currency impacts on total equity in 2008 have been reversed.

Work is already on to list the company on the London Stock Exchange. The process should be completed by the end of the second quarter, said Yuvraj Narayan, Chief Financial Officer, DP World.

The listing of shares in London will be via depository interests, denominated in sterling. This will ensure shares are fungible with the existing Nasdaq Dubai listing. Shareholders will be asked to approve amendments to the DP World's Articles of Association at the AGM on April 26 to facilitate the process and issuance of depository interests.

Subject to both the listing of its shares on LSE and the successful migration of Nasdaq Dubai to the DFM trading, settlement and custody platform, DP World will consider changing the listing currency in Dubai from dollar to dirham to encourage investment and trading by regional shareholders.


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