DP World ZPMC

Betting big on logistics looks likely to pay off for DP World, with the port operator reporting double-digit profit growth, despite a weakened container market.

Profits (reported as adjusted ebitda) climbed 21.9%, to $1.6bn, on the back of $3.4bn in revenues, up 31.9%, during the first six months of 2019.

Chief executive Ahmed Bin Sulayem said: “DP World is pleased to report like-for-like earnings growth of 22% in the first half of 2019 and attributable earnings of $753m.

Group volumes inched up, albeit marginally, by 0.5%, to 35.8m teu for the six months, with consolidated volumes performing slightly better, up 4.5% to 19.5m teu.

“This strong financial performance has been delivered in an uncertain trade environment, once again highlighting the strength of our portfolio.”

The group cited strong non-containerised revenue, propelled by a recent rash of acquisitions and investments, as the main cause for celebration.

“We’ve continued progress to become a trade enabler and solutions provider, as we look to participate across a wider part of the supply chain,” said Mr Bin Sulayem. “We have invested significantly across ports and logistics businesses and aim to connect directly to customers to offer logistics solutions and remove supply chain inefficiencies.

“We are seeing positive signs of progress in our new businesses that give us encouragement for the future.”

Significant focus has been on investing in shortsea shipping and, while last year’s $764m deal to buy Denmark’s Unifeeder remains its largest buy to date, the spending continues. This year it snapped up cross-Channel operator P&O Ferries and off-shore energy industry supply vessel provider Topaz Marine and Energy.

“Our balance sheet remains strong, and we continue to generate high levels of cash flow, which gives us the ability to invest in future growth,” continued Mr Bin Sulayem. “We aim to integrate our new acquisitions and deliver synergies with the objective of providing smart end-to-end solutions.”

On the Unifeeder investment, the company said its performances were delivering in line with expectations and continuing to benefit from structural changes in the market.

While the results announcement generally abounded with optimism, the slowdown in the container sector and the ongoing trade conflict between China and the US meant “the near-term trade outlook remains uncertain”, added Mr Bin Sulayem.

“[But] the strong financial performance of the first six months also leaves us well placed to deliver full-year results slightly ahead of market expectations.”

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