Growth of Dubai's DP World slows

Growth in DP World's container handling slowed to 2.4 per cent last year as a choppy global backdrop and capacity constraints curbed its expansion.

But the ports operator said it still expected to achieve profits in line with expectations.

It handled 56.1 million twenty-foot equivalent units (TEUs) across its global portfolio last year, a 2.4 per cent rise over the previous year. Like-for-like gross container volume growth was 3.7 per cent ahead of the year before.

The rate of growth in gross volumes has eased from the 10 per cent recorded for 2011 versus 2010.

“After a strong start to the year, we had a challenging second half,” said Mohammed Sharaf, the group chief executive.

The results reflect a tricky year for shipping and ports as factors ranging from the euro-zone crisis to a cooling of China’s economy weighed on trade demand.

The World Trade Organisation forecast global growth of 2.5 per cent last year, climbing to 4.5 per cent this year.

But the sector also faced difficulties from a lack of room for expansion at some of its top performing ports.

“During the year, the deteriorating macroeconomic environment and high levels of capacity utilisation led us to change our short-term strategy to focus more on high quality revenue-generating business,” said Sultan Ahmed bin Sulayem, the DP World chairman. DP World’s volume in its portfolio of consolidated terminals, where it has control as defined by accounting standards, dipped by 1.4 per cent to 27.4 million TEUs.

Volumes fell in the Asia-Pacific and India subcontinent and the Americas and Australia, with Europe, the Middle East and Africa the only region where activity picked up.

Volumes on a consolidated basis were down in the fourth quarter both from the year earlier period and the third quarter.

“The fourth-quarter performance was a little disappointing but there’s nothing that should give us a negative view of the company,” said Samir Murad, the vice president of research at NBK Capital.

“Port capacity will improve next year, which will help performance.”

Embraport in Santos, Brazil, is expected to come online this year. Phase one is expected to generate capacity of 1 million TEU, with phase two adding a further 1.5 million TEUs.

London Gateway, the container port being developed by DP World on the Thames Estuary in the United Kingdom, is set to open in the fourth quarter of the year. It will have an initial capacity of 1.6 million TEUs.

It is also expanding its home port of Jebel Ali, with a one million TEU expansion of terminal two and a further 4 million TEU capacity at terminal three.

As it focuses on bolstering capacity at certain ports, it has also disposed of stakes in some non-core assets.

In recent months it has sold stakes in the Russian container terminal Vostochnaya Stevedoring, British-based Tilbury Container Services and operations in Belgium. In addition, it has exited its venture in Aden, Yemen.

Analysts polled by Bloomberg forecast average earnings before interest, tax, depreciation and amortisation of US$1.3 billion (Dh4.77bn) for last year.

The company’s financial performance was expected to be line with expectations, said Mr Sharaf.

tarnold@thenational.ae