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DP World annual profit up 30.7% to $883m

28/06/2016 Facebook Twitter LinkedIn Google+ Free Zone News

Revenue for period was $3.968 billion, up 16.3% on from $3.4 billion in 2014

Dubai: DP World on Thursday said its annual profit for 2015 jumped 30.7 per cent increase in 2015, boosted by last year’s $2.6 billion acquisition of Economic Zones World (EZW).

The ports operator, one of the world’s largest, made $883 million in attributable profit in the 12 months to December 31, 2015, compared to $675 million a year earlier. Revenue rose 16.3 per cent to $3.9 billion, DP World said in a statement. The ordinary dividend, meanwhile, increased 28 per cent to 30 US cents.

But its main business, handling shipping containers at ports across six continents, was flat. It handled the equivalent of 29.1 million Twenty-Foot Equivalent Units (TEUs) shipping containers, up 2.7 per cent.

Part of the profit increase was from EZW, DP World’s group chairman and chief executive, Sultan Ahmad Bin Sulayem, told reporters on a conference call. Yuvraj Narayan, DP World’s chief financial officer, said profit would have been up 6.2 per cent without it.

DP World acquired EZW, which includes Dubai’s Jebel Ali Freezone (Jafza), in March 2015 from its parent company state-owned Dubai World. Jafza is the single largest free zone in the Arab Gulf and is located alongside DP World’s flagship Jebel Ali port.

“We expect Jafza to provide significant strategic and financial benefit,” Bin Sulayem said.

Soft markets:

Container volumes at Middle East, Europe and Africa ports rose 2.8 per cent to 21.5 million with market conditions softening in the second half “as trading conditions became more challenging,” Bin Sulayem said.

DP World will add two million TEUs of capacity at Jebel Ali in the second half and a further 1.1 million TEUs of capacity at ports in Turkey, United Kingdom, Canada and China this year. The additional capacity will cost between $1.2 billion and $1.4 billion, Bin Sulayem said.

By the end of the year the company expects to have a total of 86 million TEUs across its ports from Dubai to Argentina and remains on target to have 100 million TEUS by 2020, he said.

Currency fluctations:

In Australia and the America’s container volumes at DP World ports rose 8.6 per cent to 2.6 million in 2015 aided by the $457 million August acquisition of the Prince Rupert port in Canada. But currency fluctuations and lower commodity prices affected ports in Australia and the America’s “especially at the Embraport in Brazil,” Bin Sulayem said.

The dollar appreciated more than 8 per cent since against major currencies in 2015, according to the dollar index, and rose even more against others. The Brazilian real lost nearly half its value against the dollar in 2015.

Bin Sulayem said performance in its Chinese ports remains stable. Container volumes in the Asia Pacific and Indian Subcontinent portfolio rose 0.6 per cent to 4.8 million in 2015. “Our business in China is improving, we haven’t seen a slowness,” he said.

China is recording its slowest growth in 25 years as the country tries to shift from a manufacturing economy to one based on services.

DP World appears to be backing away from plans to operate ports in Iran. After visiting the country last year Bin Sulayem told reporters in August that DP World was in talks to operate ports on the Caspian Sea and the Gulf. But on Thursday he said the visit was a fact finding mission to assess their capabilities handling land cargo destined for Europe, China and India.

“We are confident now they have the capacity to receive the cargo. Iran is an important country and we are watching the development,” he said.

DP World shares closed up 8.86 per cent to Dh19.05 on the Nasdaq Dubai on Thursday.