Global container terminal operator DP World is investing more than Dh11 billion ($3 billion) in expansion that will see its gross capacity jump to 102.6 million twenty-foot-equivalent units (TEUs) in two years from the existing 86.8 million TEUs.
This comes following a five-year expansion program involving $6 billion since 2007.
The world’s third biggest port operator which controls 10 per cent of the global terminal capacity, yesterday reported a 21 per cent jump in its net profits for 2012 to $555 million compared with $459 million in 2011, powered by improved earnings before interest, tax, depreciation and amortization (Ebitda) margins from the emerging markets.
The Dubai-based company’s revenues increased 5 per cent to $3.12 billion driven by strong growth in the Middle East, Europe and Africa region.
The company’s earnings per share increased 10% to 90 cents.
Adjusted Ebitda and adjusted Ebitda margin increased to $1,407 million and 45.1% respectively. “Our focus on improving customer service through improved efficiencies and productivity has led to higher utilization and Ebitda margin particularly in the Asia Pacific and Indian Subcontinent region and the Middle East, Europe and Africa region,” the company said in a statement.
DP World Chairman, Sultan Ahmad Bin Sulayem commented, “This year, we have continued to actively manage our portfolio to maximum advantage, divesting non-core or low return assets. This has enabled us to move capital into those markets where we see more profitable returns whilst strengthening our capital base.
DP World has recommended $199 million dividends, or 24 US cents per share. The company has a healthy cashflow of around $3 billion. An improved cash generation from operating activities at $1.23 billion has helped reduce net debt to $2.9 billion.
“The impressive financial performance was a result of multiple strategic initiatives including sale of stakes in low performing assets in Hong Kong, focus on higher revenue container handling, increased focus on non-container cargo, price increments, higher contribution from Middle East and African activities, and expanding presence in more potential markets like Latin America and Africa,” Subir Shah, Transportation & Logistics Analyst at research consultancy Frost & Sullivan, told Gulf News.
“DP World’s future growth is expected from its well planned expansions in the higher potential geographic markets such as Africa and Latin America. The company’s strategic decisions to liquidate low return assets in Asia Pacific and divert those finances to increase capacities in the high potential markets is also likely to prove beneficial for the company in the long term.”
DP World operates over 60 terminals across six continents(1), with container handling generating around 80% of its revenue. In addition, the company currently has 11 new developments and major expansions underway in 9 countries.