DP World rides global storm with volumes up 7.5%

DP World, the international ports operator based in Dubai, beat the global downturn to report a 7.5 per cent increase in the volume of containers it handled in the first half of the year.

The result was spurred by shipping trade at its terminals across Asia Pacific, India and the Middle East.

The company managed 28.2 million containers, or what the industry terms twenty-foot equivalent units (TEUs), across its global portfolio of more than 60 terminals in the first six months of the year.

The Asia Pacific and Indian subcontinent region was the biggest driver of growth with volumes increasing 12 per cent to 13.3 million TEUs.

"The global macro-economic uncertainty seen in the first quarter of the year has continued and, if anything, has increased through the second quarter," said Mohammed Sharaf, the group chief executive at DP World.

"Despite this more challenging environment, the majority of our global portfolio continues to show resilience and we remain committed to delivering an improved operational and financial performance over 2011."

DP World is an indicator of shipping levels worldwide and thus, conceivably, of trade and economic health globally.

The level of like-for-like growth at DP World terminals worldwide was 5.5 per cent, which was higher than the 3.7 per cent growth in trade the World Trade Organisation (WTO) predicts for this year.

But despite this positive indication from DP World, economists said the global economy was still extremely fragile given the woes afflicting the euro zone.

"Global trade is negatively affected by the slowdown in the euro zone," said Giyas Gokkent, the chief economist at National Bank of Abu Dhabi.

"Trade and economic growth tends to go hand in hand. [The WTO] attributed the slowdown to the global economy losing momentum due, in part, to the European sovereign debt crisis."

Economic news yesterday reinforced economists' views on a global slowdown after China's official purchasing managers' index (PMI), an indicator of industrial activity, fell to 50.1, where 50 represents flat activity.

HSBC issued an estimated PMI reading of 49.3 last month, up from 48.2 in June.

"This is real, the economies of the West are weak and emerging economies are slowing and that will weigh on trade growth," said Simon Williams, chief economist at HSBC Middle East.

"Firms like DP World will be affected by that."

DP World said growth in Europe, Africa and the Middle East region came despite weak trading in Europe with the continent increasing volumes by 3.2 per cent to 11.6 million TEUs.

Trading in Jebel Ali was still strong in the first half, increasing at the company's global average and up 7.3 per cent to 6.6 million TEUs.

DP World said in December it would invest US$850 million (Dh3.12 billion) over the next three years to increase capacity at the Jebel Ali port.

The economy in Dubai seems to be recovering well as the value of exports and re-exports reached Dh136.2bn during the first six months of this year, an increase of 13.3 per cent compared with the same period last year, the Dubai Chamber of Commerce and Industry said yesterday.

Cargo volumes at Dubai World Central, Dubai's second airport, increased 153 per cent to 56,271 tonnes during the second quarter compared with 22,252 tonnes during the corresponding period last year, it was announced yesterday.

DP World is expanding operations in China, India and the Middle East as the company has ambitious plans to swell capacity to 100 million TEUs by 2020.

"DP World has continued to deliver a robust performance in the first six months of this year," said Sultan Ahmed Bin Sulayem, the group chairman of DP World.

"This reflects the benefits of managing a superior global portfolio, which is strategically diversified across emerging markets and focused on handling core import and export cargo."

Analysts were confident on the outlook for DP World, despite the negative forecasts for the global economy. "While recognising the global macro uncertainty and the slower market conditions being forecast by other container market participants such as freight forwarders and container shipping lines, we think the volume outperformance [of DP World] can continue," said Mark McVicar, an analyst at Nomura in London.

Nomura estimates DP World will post revenues of $3.1bn for the full year compared with $2.9bn last year. It expects pre-tax profits of $583m compared with $591m last year.

DP World's financial results for the half year to June 30 will be announced on 29 August.

rjones@thenational.ae