DP World shows that world trade is not too unhealthy

World trade cannot be too depressed judging by the growth seen at DP World over the past half year. For the period the container terminal port operator saw an 8.5% increase in volume, with underlying traffic up 11.2% year-on-year.

Of course this was not balanced evenly across the world with its UAE terminals, as ever, driving DP World’s results. The ports here grew by 13.1% propelled by the continued expansion in the Emirates economy. However the results of the rest of the ‘Europe Middle East and Africa’(EMEA) region were lower with an underlying growth of 11% suggesting that its new developments in London and Turkey did not match that of the Gulf ports, with DP World’s management stating that, “Performance in Europe has been encouraging albeit from a low base.”

Its terminals in Asia-Pacific saw a more volatile environment, benefitting from a bounce-back in intra-Asian trade with underlying volumes up 16%. The Australian and American business did not see such high levels of demand with volumes up 3.7% year-on-year.

This climate of rising demand has also enabled DP World to work its assets harder. Not only is revenue up by more than volume, with a year-on-year increase of 9.9% to US$1.66bn for the half year, whilst underlying revenue grew by 1.6%. EBITDA (Earnings Before Interest, Tax and Amortisation) grew even faster at 12.9% on an adjusted basis to US$778m.

The company continues to invest heavily in new capacity, with a spend of US$350m in the first of the year. This was dominated by investments in ‘EMEA’ however it is difficult to tell whether the bulk of this is being consumed by the dominant terminals in the UAE, or in new developments in London and Turkey.

The situation described by DP World is not balanced. It reflects that the Gulf region is continuing to grow despite the acute instability in the region. However the UAE terminals are also driven by their role as a pivot for global trade flows and these numbers suggest that these are moderately healthy. That said even the company’s chairman admitted that “geopolitical issues may result in challenges as the year progresses.”