DP World’s profits soared by 41 percent in H1. What’s their secret?

Published August 28th, 2014 - 08:43 GMT

Global marine terminal operator DP World has reported profit attributable to owners of the company before separately disclosed items of $332 million for the six months to 30 June, 40.8 per cent ahead of the first half of 2013 on a like-for-like basis.

The company’s revenue for the six months ended June 30 was $1.66 billion, up from $1.51 billion a year earlier.

As at 30 June 2014 the company’s net debt was $2.3 billion compared to $2.4 billion in the first half of 2013.  Gross debt rose to $5.8billlion due to the issuance of the $1 billion convertible bond. Bank balances and cash increased to $3.5 billion, as the proceeds from the convertible are yet to be deployed, a company statement said.

Long-term corporate bonds totalled $3.25 billion made up of a $1.75 billion 30 year unsecured MTN due in 2037 and a $1.5 billion 10-year unsecured sukuk due in 2017. In addition, DP World has a $1.0 billion convertible bond due in 2024 and $1.6 billion of debt at the subsidiary level.

Leverage (net debt to adjusted annualised EBITDA) stands at 1.6 times.

The company, which has a portfolio of about 65 terminals across six continents, signed a $3 billion loan deal last month, improving terms on its debt and raising funds for expansion. It conducted a $1 billion convertible bond issue in June.

“DP World is pleased to announce another strong set of first half results. The addition of new capacity and a pick-up in global trade has resulted in a return to robust volume growth, which has translated into an impressive financial performance,” said Sultan Ahmed Bin Sulayem, DP World chairman.

“Our portfolio is well positioned to capitalise on the significant medium to long-term growth potential of this industry and we continue to seek new opportunities in the faster growing markets.”

Group chief executive Mohammed Sharaf said: “We have reported an excellent set of financial results for the first six months of 2014, delivering 11.6 per cent like-for-like revenue growth. Encouragingly, earnings continue to significantly outpace revenue growth with 19.1 per cent EBITDA growth and 40.8 per cent EPS growth on a like-for-like basis.”

“The substantial investment programme that we initiated in 2012 is starting to bear fruit as new capacity aids in the delivery of stronger top and bottom line growth. We have made good progress a tour recently opened greenfield projects in Embraport, Brazil and DP World London Gateway, UK and we look forward to adding a further 8 million TEU of capacity to our portfolio over the next two years, providing further opportunity for growth.

“Crucially, our balance sheet remains strong and we continue to generate high levels of cashflow, which gives us the ability to invest in the future growth of our current portfolio, and the flexibility to make new investments should the right opportunities arise as well as delivering enhanced returns to shareholders over the medium term,” he added.

“The near term outlook remains encouraging, however continued geopolitical issues may result in challenges as the year progresses. Overall, we believe our business is well positioned for medium to long-term growth and we expect to continue to outperform the market.

"We remain focused on delivering relevant new capacity in the right markets, improving efficiencies, containing costs and handling higher margin containers to drive profitability. Our strong first half performance gives us confidence in meeting full year market expectations,” Sharaf concluded.

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