Port firm DP World profit jumps on Australia deal

AP News
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Posted: Aug 25, 2011 7:43 AM
Port firm DP World profit jumps on Australia deal

Port operator DP World said Thursday its profit more than tripled in the first half of the year as trade increased and it booked a large gain by selling off much of its Australian business.

Even without that one-time boost, the Dubai-based cargo handler said earnings were up 36 percent. But the world's third-largest port operator cautioned that its forecast for the second half of 2011 _ typically a stronger period for the industry _ remains foggy amid renewed concerns about a global slowdown.

"There is uncertainty around the outlook for the global economy, making it more challenging to forecast how global trade will develop," said CEO Mohammed Sharaf. He added that "the impact of this uncertainty has not, as yet, been reflected in the markets in which we operate."

The company posted a first-half profit of $740.9 million, up from $219.2 million in the same period last year.

Excluding the one-time gain for the Australia business and other adjustments, the firm said its profit rose 36 percent to $281.3 million.

DP World agreed to sell 75 percent of the Australia operations to a Citi fund for $1.5 billion late last year. The deal, which closed in March, gave the company extra cash to pay down debt and more flexibility to focus on the emerging markets that make up the bulk of its portfolio.

Trade volume at DP World ports grew 11 percent over the first half as the company lifted the equivalent of 26.2 million standard shipping containers.

Revenue slipped to $1.50 billion from $1.52 billion, though last year's figure included a one-time sales gain. Without that adjustment, revenue was up 3 percent, the company said.

Samir Murad, an analyst at NBK Capital in Kuwait, said DP World's figures were slightly above his expectations. He said the company is better positioned to withstand another global slump than it was two years ago but would still be affected if the economy sours.

"DP World has ports across the globe, so they're directly impacted by how the global economy fairs. Many people currently are talking about a (new) global recession ... If we see a decline in global trade we will see a decline in volumes" for the shipping industry, Murad said.

DP World manages sea cargo terminals on six continents, including the Middle East's biggest port in Dubai.

Executives said they are not actively seeking buyers for additional assets but will consider opportunities as they come along. In the meantime, they say they are focusing on continuing to grow their business.

Sharaf said Libya could be among the markets where DP World would be interested in gaining a foothold now that longtime leader Moammar Gadhafi appears to have been pushed from power.

"We have been and always would be interested in Libya because of the emerging market" potential it offers, he said.

The United Arab Emirates provided backing to the NATO-led mission over Libya and to the Libyan rebels now trying to consolidate control over the country. The rebel-allied ambassador to the UAE said this week that a new Libyan government would welcome Emirati aid and investment, including in the port industry.

DP World already operates ports in neighboring Egypt and Algeria.