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Dubai Port World profits down 34pc - LahoreEstate - 08-29-2009 08:25 AM
DUBAI: Dubai government-controlled Port operator DP World’s first-half profit fell 34 per cent on lower container volumes, but it expects to meet 2009 expectations after cost cuts and focus on emerging markets.
In a statement on Thursday, it said net income in the six months to June 30 fell to $188 million after it saw a 10 per cent decline in container volumes.
International shipping has been knocked hard by the global economic downturn, largely due to overcapacity caused by a construction boom that took place before the slump began.
‘The first six months of 2009 have continued to present a very challenging operating environment across the portfolio,’ the Dubai-based firm said in a statement.
The World Trade Organisation expects global trade volumes to fall nine per cent in 2009 in the biggest contraction since World War Two as demand collapses in the most serious economic downturn in decades.
Chief executive Mohammed Sharaf told a conference call the company was in line to meet full year expectations, but declined to give estimates. ‘Currently (with these) market conditions, we cannot see what will happen tomorrow, we cannot say for sure the recovery has started yet ... let’s wait and see what happens in the second half of the year,’ Sharaf said.
Revenues stood at $1.384 billion in the first half of the year, from $1.598 billion in the same period in 2008, while earnings before interest tax depreciation and amortisation were $535 million from $652 million. Throughput fell to 12.3 million twenty foot equivalent units from 13.6 million in 2008.’The United Arab Emirates region was hit the least and we see Middle East market growing faster and Asia is another we will be seeing growth there,’ Mohammed Sharaf said.
Shares of DP World rose by three per cent in early trading on the Nasdaq Dubai. The stock was up 0.48 per cent at $0.42.
‘GDP growth rates are forecast to rise and at some point that will have to follow through into increased volumes of goods moving around the world,’ said Ali Khan, managing director and head of brokerage at Arqaam Capital. ‘This should lead to an uptick in the number of containers DP World handles and the margin on these containers.’ Sharaf said he expected volumes to improve slightly in the
next half, but any improvement would be offset by a decline in its non-container operations, including its bulk business.
Morgan Stanley slashed its price target in June on the operator to 32 cents, saying the market was underestimating the depth and duration of the container port downturn, particularly in the Middle East.
Dubai World Flagship
DP World is arguably the flagship company for state-owned Dubai World, whose real estate unit Nakheel is struggling to refinance a $3.52 billion Islamic bond maturing in December.
Dubai World said in July it had liabilities close to $60 billion. DP World’s net debt was $4.79 billion, as of June 30.
Sharaf dismissed any suggestion the port operator would need financial backing saying it had ‘all the cash it needs’ with no corporate debt maturing until 2012.
Sharaf said the firm had never been approached to sell a stake to a private equity firm and any decision would be up to the company’s board. ‘There is no update ... we haven’t been approached by anybody,’ he said.
Dubai World said in May it was in talks to sell a stake in the port operator after it was approached by a regional private equity firm to sell a minority stake.
The company has postponed about half of its capacity expansion plans, including the London Gateway, due to the downturn to focus on developments nearing completion. It expects full capital expenditure in 2009 to be the region of $800 million to $1 billion.— Reuters
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/news/business/11-dubai-port-world-profits-down-34pc--il--09