Wednesday, March 11, 2020

Port and Logistics Group Declares Last Year's Profits - Now to Sort Out an F1 Racing Team

UAE Based Group Continues to Expand - Even Into Motor Racing
Shipping News Feature

DUBAI – WORLDWIDE – Having recently made the decision to delist from the stock exchange and return to private ownership, ports and logistics group DP World has now released its financial report for the year to December 2019.

Revenue for the group jumped 36.1%, largely due to acquisitions which included P&O Ferries (UK), Topaz Energy & Marine (UAE) and the two terminals in Chile (Puerto Central and Puerto Lirquen) as well as the full year impact from Continental Warehousing Corporation (India), Cosmos Agencia Maritima (Peru) and Unifeeder (Denmark), and the consolidation of the Australia region.

Adjusted EBITDA increased 17.7% with adjusted EBITDA margin of 43%, delivering profit attributable to owners of the company, before separately disclosed items, of $1,328 million, up 4.6% and EPS of $1.60. The upswing of non-container revenue (16%) shows the direction the group is tending toward as it embraces more logistics based trade.

The result is a proposed dividend of $0.40 for shareholders which DP World says is broadly in line with historic pay-out ratio. Financing through long term bond issues to the tune of $2.3 billion at record low rates prompted the company to say this removes refinancing risk. DP World says its gross global TEU handling capacity now stands at 91.8 million with consolidated capacity of 54.2 million TEU.

Capital expenditure of $1,146 million was invested across the existing portfolio with capital expenditure guidance for 2020 up to $1.4 billion with investments planned in UAE, Prince Rupert (Canada), London Gateway (United Kingdom), Jeddah (Saudi Arabia), Callao (Peru), Sokhna (Egypt) and Berbera (Somaliland).

During the year Posorja, the only deep-water port in Ecuador, and with capacity of 750,000 TEU, opened on time and on budget, and a 30-year concession renewal at Jeddah Islamic Port, the largest port and hub that connects East-West cargo in the Kingdom of Saudi Arabia was granted.

The future of course looks uncertain at the moment due to several factors. Although unrest in the middle east is not specifically mentioned, the inevitable concern when considering the supply chain disruption caused by the Covid-19 outbreak, is touched on. DP World Group Chairman and CEO, Sultan Ahmed Bin Sulayem, commented:

"This performance has been delivered in an uncertain trade environment, once again highlighting the resilience of our portfolio. We have continued to make progress on our strategy to deliver integrated supply chain solutions to cargo owners and have focused our efforts on building end-to-end capabilities for several verticals including the Automotive, Oil & Gas and FMCG industries.

”We are pleased to state that cargo owners have responded positively, and we are now delivering efficient solutions to our customers, which bodes well for the future. More recently, after much deliberation, DP World has taken the decision to announce its plans to de-list its equity from the stock exchange and return to private ownership. The strength and resilience that our business continually demonstrates throughout the cycles is due to the investment the Group has made over the years in response to changes in our industry.

”Our ability to adapt and change has been the key to our success, and we must continue to evolve for continued success. We believe this long-term approach to business is not aligned with the short term thinking of equity markets and consequently the next stage of DP World's development will take place as a private company.

"Following the planned delisting, the leverage on the balance sheet will rise temporarily but we are confident of de-leveraging as we remain committed to a strong investment grade rating in the medium term. The business continued to generate high levels of cash flow and combined with more disciplined investment and potential capital recycling, we have enough flexibility to maintain a strong balance sheet. Our immediate focus is to integrate our acquisitions and explore synergies with the objective of providing a range of smart end-to-end solutions which will improve the quality of our earnings and drive returns.

"The near-term outlook remains a cause for concern with global trade disputes, Covid-19 outbreak and regional geo-politics, causing disruption to trade. However, DP World is well positioned to respond in the short term by focusing on disciplined investment and managing the cost base to protect profitability. Overall, we remain positive on the medium to long term outlook of the industry.”

In other group news DP World and the Renault F1 Team have signed an agreement making DP World the Global Logistics Partner and Title Partner of the team, which will become the Renault DP World F1 Team starting from the 2020 season. Under the partnership, teams from DP World, Renault Sport Racing and Groupe Renault will collaboratively explore opportunities to increase the efficiency of their supply chain. Jérôme Stoll, Renault Sport Racing Chairman, commented:

“We are delighted and honoured to welcome DP World to the Renault family. This is an extremely interesting and exciting collaboration across multiple disciplines. We look forward to working with DP World, a leading global logistics provider, to explore ways of improving our efficiency and mitigating our environmental impact. After the ambitions expressed by Formula One to become fully carbon neutral by 2030, we are constantly evaluating ways to reduce our carbon footprint and our turnaround time.

”We expect that working with DP World will reveal opportunities for tangible solutions to some of the logistical challenges faced by our F1 team’s supply chain and by extension, the automotive industry at a larger scale. We also look forward to cross-fertilising our engineering skills through shared innovation.”