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DP World feels effects of slowdown
2009/4/15
DP World has announced a fresh set of strong financial results, including indications of future expansion in the Middle East and North Africa, Asia and Latin America, the Economist reported.
However, the company has felt the effects of the dramatic slowdown in world trade, and it moved eight percent fewer containers in the first two months of the year than in January and February 2008.
While seeking to trim costs overall, DP World is pinning its hopes on its home market and on the developing world to enable it to cope with the downturn.
If it manages to pull this off, this will go some way to rebuilding confidence in the long-term viability of the Dubai business model, which has taken a battering in recent months.
It has just reported after-tax profits of US$621m for 2008, a year-on-year increase of 48 percent, with total revenue rising by 20 percent to $3.3 billion.
Its consolidated throughput of containers increased by 15 percent to 27.7m TEUs. The Middle East, Europe and Africa region accounted for almost two-thirds of DP World’s global business, both in terms of revenue and throughput.
DP World said that the contraction in its business in the first two months of 2009 was most pronounced in the developed world, where volume declines have been in double digits.
The company says that its home operations in Dubai have so far proved to be “remarkably resilient”, as they handle business for the wider Gulf region as well as India and Africa.
Over the past year DP World has taken on new terminals in Yemen, Senegal, Egypt, Algeria and Spain, and has recently added capacity in Djibouti and Jebel Ali. New berths in Vietnam and Peru are scheduled to start up within the next 12 months.
However, DP World has recognised that it will have to be more selective in its approach to building up its global business as its revenue comes under increasing pressure.
The company said that it has deferred about 50 percent of its planned capacity expansion plans – it did not provide details, but one of the projects that seems likely to be put off is the London Gateway.
The bias of its business towards the developing world may also prove to be a mixed blessing, at least in the short term.
According to the Economist Intelligence Unit’s most recent world forecasts, global trade is set to contract by 5.2 percent in 2009, but the decline in the developing world will be more pronounced, at 6.5 percent, compared with 4.3 percent in the developed world. As the global economy starts to recover, it expects trade growth to be stronger in the developing world, averaging 6.6 percent in 2011 to 2013.
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2009/4/16