DP World reports net income of over $1 billion for first time; looks to expand capacity in UAE, Africa

Mar 21, 2017: Global trade enabler DP World presented its global report card for the twelve months ending 31 December 2016. For the first time, DP World delivered earnings in excess of $1 billion and above 50 per cent EBITDA margins for the full year. Furthermore, its volumes continued to grow ahead of the market with gross volumes growing 3.2 per cent versus Drewry’s full year market estimate of 1.3 per cent.

“While 2017 is expected to be another challenging year for global trade, we have made an encouraging start to the year and we expect to continue to deliver ahead-of-market volume growth. Our aim is to continue our disciplined approach to capital allocation in markets with strong growth potential while adding complementary or related services to further diversify and strengthen our business,” said Sultan Ahmed Bin Sulayem, Chairman and CEO, DP World Group.

Market conditions in the Middle East, Europe and Africa region were mixed. While DP World’s growth within its portfolio outside of the UAE was strong with Europe continuing to outperform, mainly driven by the ramp up at London Gateway, volumes in the UAE remained subdued.

Middle East, Europe and Africa

Volumes in the UAE were down by 5.3 per cent at 14.8 million TEU in 2016, reflecting a reduction in lower margin cargo, which decelerated in the fourth quarter with volumes marginally down 0.7 per cent year-on-year. Jebel Ali Free Zone continues to perform in line with expectations even in these more challenging markets. Overall, revenue in the region grew 5.5 per cent to $3,071 million on a reported basis, aided by the acquisition of Jebel Ali Free Zone. Like-forlike containerized revenue per TEU was up by 4.5 per cent and total revenue per TEU was up by 3.9 per cent. Adjusted EBITDA was $1,791 million, 11.2 per cent ahead of the same period last year mostly due to the full year contribution of the Jebel Ali Free Zone, while adjusted EBITDA margin rose to 58.3 per cent. Like-for-like revenue and adjusted EBITDA growth on prior year at constant currency was 1.9 per cent and 5.6 per cent respectively. Like-for-like adjusted EBITDA margins stood at 57.7 per cent. DP World invested $1,058 million in the region during the year. Investment was focused across the Middle East and Europe including Jebel Ali (UAE), Jebel Ali Free Zone (UAE), London Gateway (UK) and Yarimca (Turkey).

Capital expenditure in 2016 was $1,298 million, with maintenance capital expenditure of $170 million. The total spend was in line with our guidance of $1,200-1,400 million as we maintain our disciplined approach to deploying capital and postponed Terminal 3 expansion at Jebel Ali (UAE). “We expect 2017 capital expenditure to be around $1,200 million and we look forward to adding further capacity at Jebel Ali (UAE), Prince Rupert (Canada), Berbera (Somaliland), Dakar (Senegal) and London Gateway (UK),” said Sultan Ahmed Bin Sulayem.

“Our significant cash generation and investment partnerships leave us with a strong balance sheet and flexibility to capitalise on the significant growth opportunities in the industry. Overall, we continue to believe that a portfolio which has a 70 per cent exposure to origin and destination cargo and 75 per cent exposure to faster growing markets will enable us to deliver enhanced shareholder value over the long term,” he added.