DP World Limited has announced strong financial results for the six months to 30 June 2022 with total revenue growing 60.4% year-on-year and 20.1% on a like-for-like basis.  

Results Highlights

Ø  Revenue of $7,932 million (Like-for-like revenue growth of 20.1%)

§  Revenue growth of 60.4% supported by acquisitions, strong performance of feedering services and growth in high margin cargo.

§  Container revenue per TEU increasing by 9.2% driven by higher demand for storage.

Ø  Adjusted EBITDA of $2,441 million and adjusted EBITDA margin of 30.8%

• Adjusted EBITDA increased by $628 million, and EBITDA margin for the half-year stood at 30.8%. Like-for-like adjusted EBITDA margin was 38.2%.

Ø  Profit for the period attributable to owners of the Company increased to $721 million

§  Profit attributable to owners of the Company before separately disclosed items increased 51.8% on reported basis and 39.2% on a like-for-like basis.

Ø  Robust cash generation  

• Cash from operating activities increases by 29.6% to $1,931 million in 1H2022 compared to $1,490 million in 1H2021.
• Combined Leverage including PFZW guarantee (Net debt to annualised adjusted EBITDA) decreased to 3.8 times (pre-IFRS16) from 5.9 times at FY2021. On a post-IFRS16 basis, net leverage stands at 4.1 times compared to 6.0 times at FY2021. 
• DP World credit rating improves to BBB- with Positive Outlook by Fitch and remains at Baa3 with Stable Outlook by Moody’s.

Ø  Broadening of strategic partnerships strengthens balance sheet and drives long term value

• Broadening of partnerships and monetisations to raise approximately $9 billion to significantly strengthen balance sheet and provide long term flexibility. 
• Expansion of CDPQ partnership in UAE to capture the growth potential of the wider region.
• CDPQ-UAE transaction raised $5bn in tranche 1 for a 22% stake in the three UAE assets with up to a $3bn expected to be raised in tranche 2.
• Expansion of NIIF[7] India partnership expected to raise c.$300 million and will allow us to accelerate investment across ports and logistics
• New partnership with UK’s development arm BII to unlock trade potential of Africa. 
• Optimisation of France portfolio raises c.$300 million

Ø  Selective Investment in Key Growth Markets  

§  Capital expenditure of $741 million ($687 million in 2021) invested across the existing portfolio during the first half of the year.

§  Capital expenditure guidance for 2022 is for up to $1.4 billion with investments planned into UAE, Jeddah (Saudi Arabia), London Gateway (UK), Sokhna (Egypt), Senegal and Callao (Peru).

Ø  Transformation of business to drive revenue synergies and long-term relationship with cargo owners

§  New logistics assets bring value-add capabilities in fast growing markets and verticals.

§  Near-term focus on continued business transformation to drive revenue synergies.

§  Deliver value add solutions to cargo owners by leveraging our best-in-class infrastructure across logistics, ports & terminals, economic zones, digital and marine services.

Ø  Strong 1H2022 Performance, Outlook uncertain

• 1H2022 performance has been ahead of expectations but we expect growth rate to moderate in 2H2022 on more challenging economic environment.

§  Outlook is uncertain due to geopolitics, higher inflationary environment, currency fluctuations and continued supply chain disruptions.

§  DP World remains positive on medium to long-term outlook for global trade and is 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 to report a record set of first half results with adjusted EBITDA growing 34.6% and attributable earnings rising 51.8%. This significant growth demonstrates that our strategy to focus on high margin cargo and to offer customized supply chain solutions will provide sustainable returns in the long term.

Encouragingly, cargo owners continue to respond positively to our end-to-end product offering and we are focused on integrating our recent logistics acquisitions to further drive revenue synergies. We continue to invest in high growth verticals and markets to offer compelling supply chain solutions, and by leveraging our best-in-class infrastructure across logistics, ports & terminals, economic zones, digital and marine services, DP World aims to lower inefficiencies and improve connectivity in key trade lanes.

In recent months we have announced several transactions to raise approximately $9 billion.  This strengthening of the balance sheet allowed us to achieve our 2022 leverage target[8] of below 4x Net Debt to EBITDA, and this fresh capital also provides us with the flexibility to accelerate investment in key growth markets whilst maintaining an investment grade rating.

Overall, the strong first half performance leaves us well placed to deliver improved full year results. However, the near-term outlook remains uncertain due to the more challenging macro and geopolitical environment. Consequently, we expect growth rates to moderate in the second half of 2022.  Nevertheless, we remain positive on the medium to long-term fundamentals of the industry and DP Worlds ability to continue to deliver sustainable returns.”

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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 benefits from focus on high-margin cargo and supply chain solutions

The strong first half performance of 2022 is due to our consistent investment in relevant capacity, focus on high margin cargo and drive to deliver customised solutions to cargo owners. This relentless focus on providing solutions to cargo owners has allowed us to serve our customers better, which has now cemented long term relationships with cargo owners.

By leveraging our best-in-class infrastructure across logistics, ports & terminals, economic zones, digital and marine services, DP World has been removing inefficiencies across the supply chain and providing improved connectivity in fast-growing trade lanes. The demand for bespoke supply chain solutions will continue to rise as cargo owner’s demands shift, and DP World is well placed to benefit from these developments.

Broadening of partnerships strengthens balance sheet and drives long term value

DP World has announced several partnership expansions and monetisations in the last year, which has allowed us to achieve our 2022 leverage target^[9] of below 4x Net Debt to EBITDA.  Overall, we believe these transactions will raise approximately $9 billion to significantly strengthen our balance sheet and help accelerate our investment in key markets and verticals to drive returns for DP World stakeholders, whilst maintaining an investment grade rating. 

The most significant of these partnerships was the $5 billion CDPQ investment, which values the three UAE assets at approximately $23 billion[10]. The second tranche of this transaction is expected to raise up to another $3 billion which will further boost our balance sheet. Our many partnerships with CDPQ have been successful due to our complementary expertise and long-term investment horizon. We believe this transaction will enhance our UAE assets and allow us to capture the significant growth potential of the wider region.

In India, we broadened our partnership with NIIF to include our flagship India ports platform, which will raise approximately $300 million. We have made significant progress in building an inland logistics infrastructure network of great scale that complements our container ports platform, and this transaction aligns both parties to focus on delivering end-to-end supply chain solutions. The opportunity landscape in India remains significant and this transaction will allow us to accelerate investment across ports and logistics to drive returns for our respective stakeholders. 

We also created a new investment platform with BII Group to accelerate investment in Africa to unlock the trade potential of the continent. BII Group is the UK's impact investor with over 70 years of experience in successfully supporting the sustainable, long-term growth of businesses in South Asia and Africa. By combining our in-depth knowledge of ports & logistics and BII’s expertise in infrastructure investments in Africa, we can drive greater supply chain efficiencies, provide improved trade connectivity and ultimately enhance value for all stakeholders.

In France, we optimised our portfolio and raised approximately $300 million[11] by exiting Le- Havre and consolidating Eurofos. The Eurofos terminal is important to DP World’s long-term strategy as a leading Mediterranean port and we are excited to focus on unlocking the substantial growth prospects of Fos.

Business transformation journey continues with new capabilities added

In recent months, we closed two significant logistics acquisitions, Imperial Logistics and syncreon.  Imperial is an integrated logistics and market access solutions provider with a presence across 25 countries, including a substantial footprint in the high growth Africa market. Meanwhile, syncreon provides specialised value-added warehousing and distribution solutions and has a global presence across 19 countries. Both businesses bring complex solutions capability and strong long-term relationships with cargo owners. We continue to focus on our business transformation strategy as we add these new capabilities to drive revenue synergies.

Furthermore, we continue to develop a new range of products to drive efficiencies in the supply chain to support cargo owners. These include Cargoes Flow, a one-stop-solution that provides end-to-end visibility, Cargoes Finance which provides critical supply chain finance, particularly for SME’s who are the backbone of any economy; Cargoes Logistics, which simplifies trade by providing instant cargo bookings.   In summary, the focus on innovation continues, as we invest in building intelligent platforms that provide efficient solutions for cargo owners.

Continued Investment in Ports & Terminals to add much needed capacity 

In the first half of 2022, we invested $400 million in our ports & terminals portfolio, adding capacity in key markets including London Gateway (UK), Callao (Peru), Sokhna (Egypt) and Jeddah (Saudi Arabia). Our consistent approach to adding relevant capacity and investment in automation has allowed us to serve our customers better during this period of supply chain disruptions. We continue to invest in markets with strong supply-demand dynamics and remain focused on unlocking bottlenecks to serve our customers.   

Group Deputy CEO & CFO Review

DP World’s first half 2022 results have come in ahead of expectations with adjusted EBITDA of $2,441 million, up 23.6% on a like-for-like basis, while our adjusted EBITDA margin remained healthy at 30.8%.  Reported revenue grew by 60.4% to $7,932 million and attributable income to shareholders rose by 51.8%.  

Importantly, the Group strengthened its balance sheet during the year and achieved its target (DPW & PFZW) leverage⁸ of below 4.0x Net Debt to adjusted EBITDA six months ahead of schedule.  The business continued to generate high levels of cash flow with operating cash flow increasing by 29.6% year-on-year to $1,931 million.  

DP World credit rating improved to BBB- with Positive Outlook by Fitch and remains at Baa3 with Stable Outlook by Moody’s. The Group continues to target a strong investment grade rating. 

Middle East, Europe and Africa

Market conditions were positive with steady container volume growth of 1.8% on a like-for like basis. Container stevedoring revenues grew by 5.6% on a like-for-like basis as the group’s focus on higher margin cargo yielded improved results. Demand for ancillary services was also strong with like-for-like growth of 21.2% in other container revenue.

Overall, revenue in the region grew 64.5% to $5,195 million on a reported basis, mainly due to the acquisition of Imperial Logistics and syncreon. Like-for-like revenue grew 13.9% due to a strong performance in both container and non-container activity.

Adjusted EBITDA was $1,673 million, up 24.9% on a reported basis and up 13.3% on a like-for-like basis.  As expected, the adjusted EBITDA margin declined due to business mix change, particularly with the addition of the logistics acquisitions.

We invested $491 million in the region, mainly focused on capacity expansions in UAE, Sokhna (Egypt), Jeddah (Saudi Arabia) and London Gateway (UK).

Asia Pacific and India

Market conditions in the regions were robust with container volume growth in Asia Pacific remaining solid. However, we saw a softer performance in India following a strong year in 2021. Demand for ancillary services remained strong with like-for-like growth of 24.1% in other container revenue.

Non-containerised like-for like revenue growth stood at 66.3%, driven by a strong performance from the feedering and logistics businesses of Feedertech and Unico which have benefited from the higher freight rates.

Total reported revenues rose 66.8% to $1,316 million and adjusted EBITDA increased by 98.5% to $552 million due to strong top line growth. On a like-for-like basis, adjusted EBITDA increased by 98.9%.  Adjusted EBITDA margin stood at 41.9%.  Post tax profit rose significantly to $401 million. 

Capital expenditure in this region during the year was $76 million, mainly focused on economic parks in India.  

Australia and Americas

Container volumes remained robust in the region with solid growth in Americas while growth in Australia was steady.

Reported revenues rose 42.5% to $1,422 million and adjusted EBITDA increased by 29.4% to $478 million. On a like-for-like basis, adjusted EBITDA increased 17.9%. Profit after tax increased to $304 million due to strong top line growth.

We invested $162 million in capital expenditure in this region mainly focused on Prince Rupert (Canada) and Callao (Peru).

Cash Flow and Balance Sheet

Adjusted gross debt stood at $18.7 billion compared to $19.1bn as of 31 December 2021. Lease and concession fee liabilities accounted for $4.4 billion with an interest-bearing debt of $14.3 billion as of 30 June 2022.   Cash stood at $3.2 billion, resulting in net debt of $15.5bn or $11.0bn (pre IFRS 16). Our net leverage (adjusted net debt to last 12 months adjusted EBITDA) stands at 3.5 times post IFRS16 and would be on 3.0 times pre-IFRS16 basis.  DP World is also guaranteeing $2.2 billion of Port & Free Zone World debt related to the de-listing of DP World following the recent repayment of $5.0 billion of debt post the CDPQ transaction. 

Capital Expenditure

Consolidated capital expenditure in the first half of 2022 was $741 million, with maintenance and replacement capital expenditure of $171 million. We expect the full year 2022 capital expenditure at up to $1.4 billion with investments planned into the UAE, Jeddah (Saudi Arabia), London Gateway (UK), Senegal, Sokhna (Egypt), and Callao (Peru).

Net finance costs before separately disclosed items

The net finance cost for the six months was slightly lower than the prior period at $373 million (1H2021: $385 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 of 2022, DP World’s income tax expense before separately disclosed increased to $224 million (1H2021: $147 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 $163 million against 1H2021 of $110 million mainly due strong performance in the feedering business.

[ENDS]

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[1] Before separately disclosed items (BSDI) primarily excludes non-recurring items. DP World reported separately disclosed items of  $145.7 million loss for the period.

[2] Like-for-like at constant currency is without the new additions at Imperial Logistics, syncreon, Angola, Traders Market, Transworld and Avana. Also excludes divestment of Visakha (India).

[3] Gross throughput is throughput from all consolidated terminals plus equity-accounted investees.

[4] Consolidated throughput is throughput from all terminals where the Group has control as per IFRS.

[5] Adjusted EBITDA is Earnings before Interest, Tax, Depreciation & Amortisation including share of profit from equity-accounted investees before separately disclosed items.

[6] Like-for-like adjusted EBITDA margin.

[7] Announced June 29^th and is expected to close 1Q2023

[8] Pre IFRS 16

[9] Pre IFRS 16

[10] Enterprise Value

[11] Transaction closed 4 August 2022