DP World reports stable volumes in 1Q2020 – outlook challenging

DP World PLC handled 17.2 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals in the first quarter of 2020, with gross container volumes decreasing by 1.7% year-on-year on a reported basis and up 0.3% on a like-for-like basis. Reported volumes declined in Asia Pacific and India Region due to the expiry of concession in Surabaya (Indonesia) and disposal in Tianjin (China).

Jebel Ali (UAE) handled 3.4 million TEU in 1Q2020, down 3.4% year-on-year, due to loss of lower-margin cargo. Like-for-like growth in Asia, Middle East and Africa was offset by weakness in India, Europe and Australia.

At a consolidated level, our terminals handled 10.3 million TEU during the first quarter of 2020, increasing 12.9% on a reported basis and up 0.9% year-on-year on a like-for-like basis. Reported consolidated volume in the Americas and Australia region was boosted by the consolidation of Australia, Caucedo (Dominican Republic), acquisition of container terminals in Chile and commencement of operations in Posorja (Ecuador).

Group Chairman and Chief Executive Officer Sultan Ahmed Bin Sulayem commented: While DP World has delivered a resilient performance in 1Q2020 with like-for-like throughput broadly flat year-on-year, the real impact of covid-19 will be seen from 2Q2020 onwards. Global trade and container volumes are forecast to decline in 2020 and the wide range of estimates by industry specialists (Drewry -3%, Sea-Intel -10%) further emphasizes the short-term uncertainty faced by our sector. Similarly, the timing of any recovery is uncertain with trade expected to pick-up as and when global economic activity normalizes.

Given the more challenging environment, our near-term focus is on integrating our recent acquisitions to drive synergies, containing costs to protect profitability, managing growth capex to preserve cashflow and maintaining our investment grade rating.

On a more positive note, DP World’s investment in digital technology and automation has allowed us to minimize the disruption faced at our ports and we remain operational. Importantly, we continue to work with our customers and various governments to ensure supply chains remain open for the movement of essential and critical cargo across the world.

Overall, the outlook is a cause for concern, but we remain positive on the long-term fundamentals of the industry. Furthermore, our strategy of providing integrated supply chain solutions to beneficial cargo owners leaves us well placed to benefit early from any sustained recovery in the global economy.

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