DP WORLD REPORTS STRONG 1H2021 Financial results

Thursday, 19th August 2021, Dubai, UAE: DP World Limited today announces strong financial results for the six months to 30 June 2021 with EBITDA growing 18.2% year-on-year.   

Results Highlights

Ø Revenue of $4,945 million (Revenue growth of 21.3% on reported basis)

§  Revenue growth of 21.3% supported by acquisitions and strong growth in India, Australia, and UK.

§  Like-for-like revenue increased by 9.0%.

Ø Adjusted EBITDA of $1,813 million and adjusted EBITDA margin of 36.7%

§ Adjusted EBITDA increased 18.2%, and EBITDA margin for the half-year stood at 36.7%. Like-for-like adjusted EBITDA margin of 38.5%.

Ø Profit for the period attributable to owners of the Company increased to $475 million

§ Profit attributable to owners of the Company before separately disclosed items increased 51.9% on reported basis and 39.4% on a like-for-like basis.

Ø Robust Cash Generation   

§ Cash from operating activities remains strong at $1,490 million in 1H2021 compared to $1,124 million in 1H2020.

§ Leverage (Net debt to annualised adjusted EBITDA) decreased to 3.5 times (Pre-IFRS16) from 3.7 times at FY2020. On a post-IFRS16 basis, net leverage stands at 4.0 times compared to 4.3 times at FY2020. 

§ DP World credit rating remains investment grade at BBB- with Stable Outlook by Fitch and Baa3 with Stable Outlook by Moody's.

Ø Selective Investment in Key Growth Markets  

§ Capital expenditure of $687 million invested across the existing portfolio during the first half of the year.

§ Capital expenditure guidance for 2021 is for approximately $1.2 billion with investments planned into UAE, Canada, Jeddah (Saudi Arabia), Berbera (Somaliland), Sokhna (Egypt), Luanda (Angola), P&O Ferries, London Gateway (UK) and Callao (Peru).

Ø Acquisitions to bring value-add capabilities, exposure to high growth markets and long-term relationship with cargo owners

§ Announced acquisitions of syncreon and Imperial Logistics.

§ Acquisitions bring value-add capabilities in fast growing markets and verticals.

§ Adds long-term relationship with cargo owners.

Ø Strong 1H2021 Performance, Near Term Outlook Positive

§ Portfolio has delivered strong performance in 1H2021 on higher consumer spend and rebound in global trade.

§ Near term outlook remains positive but we expect growth rates to moderate.

§ DPW focused on delivering integrated supply chain solutions to cargo owners to drive growth and returns.

DP World Group Chairman and CEO, Sultan Ahmed Bin Sulayem, commented:

"We are delighted with the strong set of first half results with adjusted EBITDA growing 18.2% and attributable earnings rising 51.9%. This significant growth once again demonstrates that we are in the right locations and a focus on origin and destination cargo will continue to deliver the right balance between growth and resilience. 

In recent years we have seen cargo owners respond positively to our integrated end-to-end product offering and we aim to continue with our drive to enable trade. Our recently announced acquisitions of Imperial Logistics and syncreon bring value-add capabilities in high growth verticals and markets, which will allow us to offer a more compelling set of supply chain solutions. By leveraging our best-in-class infrastructure across inland logistics, ports & terminals, economic zones and marine logistics network, DP World aims to lower inefficiencies and provide improved connectivity in fast growing trade lanes such as Asia, Middle East & Africa.

"Importantly, we continue to make positive progress with our capital recycling program and this combined with the strong operational performance, leaves us well positioned to deliver on our 2022 combined (DP World and PFZW) leverage target of less than 4x Net Debt to adjusted EBITDA (Pre IFRS16).

"Overall, the near-term outlook remains positive, and while we are mindful that the Covid-19 pandemic and geopolitical uncertainty could once-again disrupt the global economic recovery, we remain positive on the medium to long-term fundamentals of the industry and DP Worlds ability to continue to deliver sustainable returns."

- END -

Investor Enquiries

Redwan Ahmed                                                       Amin Fikree

DP World Limited                                            DP World Limited

Mobile: +971 50 554 1557                                Mobile: +971 56 6811553

Direct:  +971 4 808 0842                                  Direct : +971 4 808 0923

[email protected]                          [email protected]

19th August 12:00pm UAE, 9:00am UK Call with Video Conference

Ø Conference call for analysts and investors hosted by Yuvraj Narayan, Group Chief Financial, Strategy and Business Officer.

Ø A playback of the call will be available after the conference call concludes. For the dial in details and playback details please contact [email protected].

The presentation accompanying the conference call will be available on DP World's website within the investor centre under Financial Results on https://www.dpworld.com/investor-relations/financials-presentation/financial-reports/financial-results from approximately 9am UAE time.

Forward-Looking Statements

This document contains certain "forward-looking" statements reflecting, among other things, current views on our markets, activities and prospects. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur and which may be beyond DP World's ability to control or predict (such as changing political, economic or market circumstances). Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of DP World speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Except to the extent required by law, DP World does not undertake to update or revise forward-looking statements to reflect any changes in DP World's expectations with regard thereto or any changes in information, events, conditions or circumstances on which any such statement is based.

Group Chairman and CEO Statement

DP World to benefit from structural shifts in consumer behaviour

The demand for bespoke supply chain solutions continues to rise as consumer and corporate behaviour post pandemic shifts and DP World is well placed to benefit from these developments. The Covid-19 pandemic has resulted in structural changes that have had a profound impact on global trade.

Firstly, corporates are re-examining their supply chains and assessing for potential concentration risk, and many are considering a more regional distributional model or near-sourcing to avoid future disruptions.  DP World's business has always been built with a focus on diversity, faster growing markets, and origin & destination cargo, and again we believe we are well prepared to meet the future demands of cargo owners.

Furthermore, there has been an acceleration in e-commerce activity, with sales in the US increasing by 32% in 2020 to reach $792 billion, a target that was achieved 2 years ahead of pre-Covid estimates, and the trends seen in 2021 suggests the e-commerce growth rate has only accelerated. Many consumers have now changed the way they transact permanently, and we expect this trend to accelerate in emerging markets. Our early investment in digital technology such as Dubai Trade and terminal automation has allowed us to offer solutions demanded by cargo owners today, and our recently announced acquisitions will enable us to offer more customised solutions going forward.  This focus on innovation continues, as we invest to build an intelligent platform that allows cargo owners to trade directly.

Adding depth to our value-add solutions

Recently we announced the acquisitions of Imperial Logistics and syncreon[7] that bring value-add capabilities in high growth verticals and markets, and these assets will allow us to offer a more compelling set of supply chain solutions.

Imperial is an integrated logistics and market access solutions provider with a presence across 25 countries, including a significant footprint in the high growth Africa market.  The Group focuses on key fast-growing industries which include healthcare, consumer, automotive, chemicals, industrial and commodities. Imperial's business has been built on long-standing partnerships with beneficial cargo owners (BCO's) with key relationships averaging more than 15 years.

syncreon provides specialized value-added warehousing and distribution solutions and has a global presence across 19 countries. syncreon services a large and diversified portfolio of customers made up of multinational companies and specializes in the design and operation of complex supply chain solutions for the high growth automotive and technology verticals.

Both businesses bring complex solutions capability and strong long-term relationships with cargo owners which fits with DP Worlds vision to provide smart tech-led supply chain solutions to enable trade across key markets.

Continued Investment in Ports & terminals

In the first half of 2021, we have invested $687 million in our existing portfolio, adding capacity in key markets. Also, we continue to invest selectively in container port terminals that offer compelling value. We started operating the multipurpose terminal in Luanda, Angola. Luanda is a key port that handles all cargo for a country that is the 5^th largest economy in Africa. 

We announced the 50-year concession agreement and development of Ndayane terminal in Senegal.  DP World's existing operations in Dakar (Senegal) has seen solid growth in recent years and with utilisation rates high, it is time to invest in new facilities to make room for further growth. The new port will support Senegal's development over the next century, and further reinforce Dakar's role as a major logistics hub and gateway to West and North West Africa.

We also announced a return to Indonesia to develop and operate an integrated container port and, industrial and logistics park in Gresik, Java (Indonesia). The Java region is the key trading hub and generates approximately 60% of Indonesia's GDP. The container market in the region has delivered consistently strong growth and utilisation rates remain high.  The first phase of the greenfield project will add container capacity of 1 million TEU (twenty-foot equivalent units) and 110-hectare industrial & logistics park and is expected to be operational by 2023.

Group Chief Financial, Business and Strategy Officer's Review

DP World has delivered a strong set of financial results in the first half of 2021 with continued solid cash generation.  Our adjusted EBITDA of $1,813 million, is up 11.9% on like-for-like basis, while our adjusted EBITDA margin has remained broadly stable at a healthy 36.7%.  Reported revenue grew by 21.3% to $4,945 million and attributable income rose by 51.9% demonstrating strong operational gearing.   

The Group continues to target 2022 combined (DPW & PFZW) leverage of below 4.0x Net/Debt to adjusted EBITDA on a pre-IFRS 16 basis and remains committed to a strong investment grade rating in the medium term. The business continued to generate high levels of cash flow with operating cash flow increasing by 32.5% year-on-year to $1,490 million.  The strong cash generation combined with the well progressed capital recycling program, leaves us well placed to meet our 2022 leverage target.

Importantly, DP Worlds credit rating remains investment grade at BBB- with Stable Outlook by Fitch and Baa3 with Stable Outlook by Moody's.

Middle East, Europe and Africa

Market conditions were positive in this region as volumes rebounded strongly. Consolidated throughput was up 15.9% excluding Jebel Ali (UAE), with Europe being the key driver of growth.   Encouragingly, Jebel Ali volumes turned positive with 3.4% growth in the first half as market conditions stabilized.  

Overall, revenue in the region grew 7.5% to $3,159 million on a reported basis, benefitting from a full contribution from TIS terminals in Ukraine and new port concession in Angola.  

Like-for-like revenue growth was below volume growth due to weaker non-container revenues.

Adjusted EBITDA was $1,340 million, up 5.9% on a reported basis and up 4.6% on a like-for-like basis.

We invested $516 million in the region, mainly focused on capacity expansions in UAE, Sokhna (Egypt), Berbera (Somaliland) and London Gateway (UK).

Asia Pacific and India

Markets conditions in this region were strong particularly in India as container volumes recovered by 19.5% year-on-year. Reported revenue growth of 121.3% was aided by the acquisition of KRIL and Unico, while share of profit from equity-accounted investees increased 1.0% on like-for-like basis.

Adjusted EBITDA of $278 million increased 40.3% on a like-for-like basis on strong container volumes and improved logistics revenue.  

Capital expenditure in this region during the year was $69 million, mainly focused in Pusan (South Korea) and Mumbai (India).

Australia and Americas

Container volumes rebounded strongly in both Americas and Australia. While growth in Australia has been broad based, the key growth drivers in Americas were Canada, Brazil, Dominican Republic and Peru.  

Reported revenues rose 27.6% to $998 million and adjusted EBITDA increased by 48.3% to $370 million. On a like-for-like basis, adjusted EBITDA increased 34.0%. The difference in reported and like-for-like revenue growth is mostly explained by currency movements and acquisition of Fraser Surrey (Canada). Profit from equity-accounted investees increased to $3.1 million.

We invested $58 million capital expenditure in this region mainly focused in Prince Rupert and Vancouver (Canada).

Cash Flow and Balance Sheet

Adjusted gross debt stands at $18.0 billion compared to $16.3bn as of 31 Dec 2020. Lease and concession fee liabilities account for $3.5 billion with interest bearing debt of $14.5 billion as of 30 June 2021.   Cash stood at $3.6 billion resulting in net debt of $14.4bn or $10.9bn (pre IFRS 16). Our net leverage (adjusted net debt to annualized adjusted EBITDA) stands at 4.0 times post IFRS16 and would be on a 3.5 times pre-IFRS16 basis.  DP World is also guaranteeing $6.4 billion of Port & Free Zone World debt related to the de-listing of DP World.  

Capital Expenditure

Consolidated capital expenditure in the first half of 2021 was $687 million, with maintenance capital expenditure of $143 million. We expect the full year 2021 capital expenditure to be approximately $1.2 billion to be invested in UAE, Canada, Jeddah (Saudi Arabia), Berbera (Somaliland), Sokhna (Egypt), Luanda (Angola), P&O Ferries, London Gateway (UK) and Callao (Peru).

Net finance costs before separately disclosed items 

Net finance cost for the six months was lower than the prior period at $385 million (1H2020: $436 million) mainly due to higher interest income.

Taxation

DP World is not subject to income tax on its UAE operations. The tax expense relates to the tax payable on the profit earned by overseas subsidiaries, as adjusted in accordance with the taxation laws and regulations of the countries in which they operate. For the first six months 2021, DP World's income tax expense before separately disclosed increased to $147 million (1H2020: $103 million) mainly due to increased profits in tax jurisdictions.

Profit attributable to non-controlling interests (minority interest)

Profit attributable to non-controlling interests (minority interest) before separately disclosed items was $110 million against 1H2020 of $21 million due to acquisitions of Unico (South Korea), TIS (Ukraine), Fraser Surrey (Canada) and improved performance in Australia.

About DP World:

We are the leading provider of worldwide smart end-to-end supply chain logistics, enabling the flow of trade across the globe. Our comprehensive range of products and services covers every link of the integrated supply chain - from maritime and inland terminals to marine services and industrial parks as well as technology-driven customer solutions. 

 We deliver these services through an interconnected global network of 181 business units in 64 countries across six continents, with a significant presence both in high-growth and mature markets. Wherever we operate, we integrate sustainability and responsible corporate citizenship into our activities, striving for a positive contribution to the economies and communities where we live and work.

Our dedicated, diverse and professional team of more than 56,000 employees from 140 nationalities are committed to delivering unrivalled value to our customers and partners. We do this by focusing on mutually beneficial relationships - with governments, shippers, traders, and other stakeholders along the global supply chain - relationships built on a foundation of mutual trust and enduring partnership.

We think ahead, anticipate change and deploy industry-leading technology to broaden our vision of more efficient, transparent and resilient world trade. We achieve this by leveraging disruptive innovation to create the smartest and most effective logistics solutions, while ensuring a positive and sustainable impact on economies, societies and our planet.

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