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DP World sees uncertain outlook after record $721m first-half profit

The strong first half performance of 2022 is due to our consistent investment in relevant capacity, focus on high margin cargo and drive to deliver customised solutions to cargo owners, says Sultan Ahmed bin Sulayem, Group Chairman and CEO of DP World

DP World on Thursday reported a record $721 million first-half profit boosted by elevated shipping rates but said it expected its profit, revenue, and container growth rates to moderate in the rest of the year.

The company said profit climbed 51.8 per cent, up from $475 million in the same period a year ago.

DP World, one of the world’s biggest port operators, said its first-half revenue recorded 60.4 per cent year-on-year growth this year while on a like-for-like basis total revenue surged 20.1 per cent to $7.93 billion.

In a statement, the Dubai-based group said profit attributable to owners of the company, before separately disclosed items, climbed 52 per cent in January-June 2022 to $721 million from $475 million in the corresponding period last year.

The company, which also owns logistics parks, attributed the strong performance to its consistent investment in relevant capacity and focus on high margin cargo. Acquisitions and strong performance of feedering services also supported the revenue growth.

Strong balance sheet

DP World, one of the world's largest port operators, further said container revenue per TEU increased by 9.2 per cent due to higher demand for storage.

"The first-half profit for the period attributable to owners of the company increased to $721 million. Profit attributable to owners of the company, before separately disclosed items, increased 51.8 per cent on reported basis and 39.2 per cent on a like-for-like basis," the statement said.

The company also reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $2.44 billion and adjusted EBITDA margin of 30.8 per cent during January-June 2022.

"Adjusted EBITDA increased by $628 million, and EBITDA margin for the half-year stood at 30.8 per cent while adjusted EBITDA margin on like-for-like basis rose to 38.2 per cent," DP World statement said.

Cash from operating activities increases by 29.6 per cent to $1.93 billion in first half of 2022 compared to $1.49 billion in the corresponding period last year, it added.

"We are delighted to report a record set of first half results with adjusted EBITDA growing 34.6 per cent and attributable earnings rising 51.8 per cent. 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," DP World Group Chairman and CEO, Sultan Ahmed bin Sulayem, said.

Encouragingly, he said cargo owners continue to respond positively to "our end-to-end product offering and we are focused on integrating our recent logistics acquisitions" to further drive revenue synergies. "We continue to invest in high growth verticals and markets to offer compelling supply chain solutions, and by leveraging our best-in-class infrastructure across logistics, ports and terminals, economic zones, digital and marine services, DP World aims to lower inefficiencies and improve connectivity in key trade lanes," Bin Sulayem said.

"In recent months, we have announced several transactions to raise approximately $9 billion. This strengthening of the balance sheet allowed us to achieve our 2022 leverage target of below 4x net debt to EBITDA, and this fresh capital also provides us with the flexibility to accelerate investment in key growth markets whilst maintaining an investment grade rating," he said.

Uncertain outlook

The group said 2022 performance has been ahead of expectations but "we expect growth rate to moderate" in second half on more challenging economic environment.

Outlook is uncertain due to geopolitics, higher inflationary environment, currency fluctuations and continued supply chain disruptions. DP World remains positive on medium to long-term outlook for global trade and is focused on delivering integrated supply chain solutions to cargo owners to drive growth and returns, the statement said.

Overall, Bin Sulayem said the strong first-half performance leaves us well placed to deliver improved full year results. However, the near-term outlook remains uncertain due to the more challenging macro and geopolitical environment.

"Consequently, we expect growth rates to moderate in the second half of 2022. Nevertheless, we remain positive on the medium to long-term fundamentals of the industry and DP Worlds ability to continue to deliver sustainable returns," he said.

Last month, DP World said it handled 39.5 million TEU across its global portfolio of container terminals during the first half of this year, reflecting an increase of more than two per cent annually.

— muzaffarrizvi@khaleejtimes.com