DP World: Keeping up with the global pace in a fast-moving world

December 6, 2017 in Infrastructure

In a business world with an ever-increasing onus on globalisation, logistics has become of paramount importance, with the world leaders in a constant race to launch the latest innovation. Very much in the mix with ingenuity and invention is Dubai-based DP World.

According to the company’s website; “DP World is a leading enabler of global trade and an integral part of the supply chain.

“We operate multiple yet related businesses – from marine and inland terminals, maritime services, logistics and ancillary services to technology-driven trade solutions.

“We have a portfolio of 77 operating marine and inland terminals supported by over 50 related businesses in 40 countries across six continents with a significant presence in both high-growth and mature markets. We aim to be essential to the bright future of global trade, ensuring everything we do has a long-lasting positive impact on economies and society.”

In August, the company announced its financial results for the six months ending 30 June, delivering profit attributable to owners of $608 million, up 50.2 per cent.

With over 37,000 employees from 110 countries, the business truly operates on a global basis, fostering long-standing relationships with governments, shipping lines, importers and exporters, communities, and many other important constituents of the global supply chain, to add value and provide quality services today and tomorrow.

Container handling remains at the heart of DP World’s business and generates more than three quarters of its revenue. According to the website, in 2015 the company handled 61.7 million TEU (twenty-foot equivalent units) across our portfolio. With its committed pipeline of developments and expansions, the current gross capacity of 79.6 million TEU is expected to rise to more than 100 million TEU by 2020, in line with market demand.

“By thinking ahead, foreseeing change and innovating we aim to create the most productive, efficient and safe trade solutions globally,” it comments.

That strategy paid off handsomely in the first half of 2016. In August, DP World reported revenue growth of 10.2 per cent to $2 billion compared to the same period last year.

This was supported by the acquisitions of Jebel Ali Free Zone (UAE) and Prince Rupert (Canada). Containerised revenue per TEU (twenty-foot equivalent unit) grew 5.4 per cent on a like-for-like basis.

The company successfully raised $1.2 billion in a new seven-year sukuk transaction at significantly improved terms, refinancing $1.1billion of the existing 2017 sukuk through a tender offer and extending the debt maturity profile.

Investment of course plays an important part in DP World’s continued success and the company made a capital expenditure of $586 million, investing across the portfolio during the first half of the year.

Capital expenditure guidance for 2016 remains unchanged at between $1.2 billion and $1.4 billion with investments planned into Jebel Ali port (UAE), Jebel Ali Free Zone (UAE), London Gateway (UK), Prince Rupert (Canada), JNP Mumbai (India), and Yarimca (Turkey).

DP World Group chairman and CEO, Sultan Ahmed Bin Sulayem, said: “DP World is pleased to announce a strong set of first half results, with 50 per cent year-on-year earnings growth, and 56 per cent adjusted EBITDA margins. The more modest like-for-like earnings growth is a reflection of the challenging trade environment.

“This financial performance has been achieved despite uncertain market conditions, which once again demonstrates the resilient nature of our portfolio. In 2016, we have invested $586 million of capex in key growth markets, and this investment leaves us well placed to capitalise on the significant medium to long-term growth potential of this industry.

“We will maintain the existing shape of our ports portfolio that has a 70 per cent exposure to origin and destination cargo and 75 per cent exposure to faster growing markets. This positioning will enable us to deliver both earnings growth and shareholder value over the long term.”

He added: “The outlook for trade growth remains uncertain, however, we believe our portfolio is well positioned to continue to outperform the market. We remain focused on delivering relevant new capacity in the right markets through disciplined investment, improving efficiencies and managing costs to drive profitability.”

One of the most significant investments for DP World has been in the expansion of Dubai’s Jebel Ali Port facility.

The company had announced in July 2015 that it would invest $1.6 billion in Terminal 4, which was to be completed by 2018. Jebel Ali handles shipments not only for the UAE but for much of the region.

Since last year, however, growth in the oil-rich economies of the Gulf have slowed because of low oil prices.

“(The) global trade environment remains challenging including for Jebel Ali Port,” DP World said, adding that the company handled 7.4 million TEUs of cargo in the UAE during the first half of 2016, down 6 per cent from a year ago.

As a consequence, it was announced that DP World will delay the expansion of Dubai’s Jebel Ali port, its main facility.

A plan to add 1.5 million twenty-foot equivalent units (TEU) of capacity to Terminal 3 at Jebel Ali will be delayed into 2017, while expansion of Terminal 4 will also be slowed, DP World said without giving details.

For ports, alternative energy is becoming an ever-popular choice as an efficient solution that’s also an environmentally friendly one.

DP World also announced that work had commenced on the biggest distributed solar rooftop project in the Middle East. In all, 88,000 solar panels are to be installed at DP World’s Dubai facilities, such as warehouses, offices and car parks in Jebel Ali Free Zone (Jafza) and Mina Rashid Port.

The first phase of this project is due for completion in 2017, and it’s anticipated that 22,000 tonnes of carbon will be saved on an annual basis. Following the first phase, the next two are set to install further solar panels in Jafza and Mina Rashid.

DP World Group chairman and chief executive, Sultan Ahmed Bin Sulayem, said that in addition to the environmental benefits, the initiative will contribute to Dubai’s Integrated Energy Strategy 2030 (which aims to reduce energy demand by 30 per cent by that date) and the UAE vision 2021 for a sustainable environment, a national initiative for building a green economy launched by HH Sheikh Mohammed Bin Rashid Al Maktoum.

“By raising awareness of renewable energy, we are helping work towards a carbon neutral future for the UAE. This project demonstrates the scale of DP World’s ambition to be a world leader in sustainability and we look forward to sharing the learnings across our business and also with our stakeholders.”

DP World continues to excel and innovate, always looking forwards in a fast-moving world.