Net Income of over $1 billion for first time
DUBAI: Global trade enabler DP World announced strong financial results from its global portfolio for the twelve months ending 31st December 2016. On a reported basis, revenue grew 4.9% and adjusted EBITDA increased 17.4% with adjusted EBITDA margin of 54.4%, delivering profit attributable to owners of the Company, before separately disclosed items, of $1,127 million, up 27.6%, and EPS of 135.7 US cents. On a like-for-like basis, revenue grew 1.3%, adjusted EBITDA increased by 6.6% with adjusted EBITDA margin of 52.6% and attributable earnings increased 6.2%.
DP World Group Chairman and CEO, Sultan Ahmed Bin Sulayem, commented: “We are pleased to announce another set of strong financial results for 2016, as we delivered earnings in excess of $1 billion and above 50% EBITDA margins for the full year for the first time. Encouragingly, our volumes have continued to grow ahead of the market with gross volumes growing 3.2% vs. Drewry full year market estimate of 1.3%. This is pleasing given the significant challenges parts of our portfolio have faced, and once again demonstrates the resilient nature of our diversified portfolio. Disciplined investment throughout the economic cycle has been one of the keys to delivering consistent growth and in 2016, we invested $1,298 million across our portfolio in markets with strong demand and supply dynamics.
“While 2017 is expected to be another challenging year for global trade, we have made an encouraging start to the year and we expect to continue to deliver ahead-of-market volume growth. Our aim is to continue our disciplined approach to capital allocation in markets with strong growth potential while adding complementary or related services to further diversify and strengthen our business.
“The Board of DP World recommends increasing the dividend by 26.7% to $315.4 million, or 38.0 US cents per share, reflecting the strong earnings growth in the year. The Board is confident of the Company’s ability to continue to generate cash and support our future growth whilst maintaining a consistent dividend payout.
“Our significant cash generation and investment partnerships leave us with a strong balance sheet and flexibility to capitalise on the significant growth opportunities in the industry. Overall, we continue to believe that a portfolio which has a 70% exposure to origin and destination cargo and 75% exposure to faster growing markets will enable us to deliver enhanced shareholder value over the long term.”
Revenue of $4,163 million
· Revenue growth of 4.9% supported by full year contribution of Jebel Ali Free Zone (UAE) and Prince Rupert (Canada).
· Like-for-like revenue increased by 1.3% driven by a 2.3% increase in containerized revenue.
· Volume growth of 0.4% despite challenging markets.
· Containerized revenue per TEU (twenty-foot equivalent unit) grew 4.0% and total revenue per TEU by 3.0% on a like-for-like basis.
· Total containerized revenue grew by 3.8% on a reported basis and 2.3% on a like-for-like basis as containerized Other revenue was up 6.1% on a reported basis and 5.1% on a like-for-like basis. While non-container revenue decreased by 1.1% on a like-for-like basis and increased by 7.5% on a reported basis.
Adjusted EBITDA of $2,263 million and adjusted EBITDA margin of 54.4%
· Adjusted EBITDA margin for the full year reached a new high of 54.4% reflecting the Jebel Ali Free Zone acquisition and increased contribution from other higher margin locations. Like-for-like adjusted EBITDA margin was at 52.6%.
Profit for the period attributable to owners of the Company of $1,127 million
· Strong adjusted EBITDA growth resulted in a 27.6% increase in profit attributable to owners of the Company before separately disclosed items on a reported basis and 6.2% growth on a like-for-like basis at constant currency.
Strong cash generation, robust balance sheet and credit rating upgrade
· Cash from operating activities amounted to $2,002 million up from $1,928 million in 2015.
· Free cash flow (post cash tax maintenance capital expenditure and pre dividends) amounted to $1,674 million against $1,595 million in 2015.
· Leverage (Net Debt to adjusted EBITDA) decreased to 2.8 times from 3.2 times in 2015.
· DP World was upgraded by both rating agencies Fitch and Moody’s to BBB from BBB- and Baa2 from Baa3 respectively with stable outlook.
Improvement in return on capital employed
· Return on capital employed (ROCE) improved by 160 basis points to 9.5% in 2016 from 7.9% in 2015.
Reduced financing cost and lowering refinancing risk
· Successfully raised $1.2 billion in a new 7-year Sukuk transaction at significantly improved terms, refinancing $1.1 billion of the existing 2017 Sukuk through a tender offer and extending the debt maturity profile. Furthermore, we raised £650 million 20- and 30-year multi tranche term financing placed with pension funds, insurance companies and financial institutions for London Gateway Port, and $CAD 603 million 7-year bank loan for the Canadian business. This further extends the debt maturity profile and reduces the refinancing risk of DP World.
Total dividend per share increased by 26.7% to 38 US cents
· Ordinary dividend increased by 26.7% to 38 US cents to reflect growth in 2016 earnings.
Continued investment in high quality long-term assets to drive long-term profitable growth
· Capital expenditure of $1,298 million invested across the portfolio during the year.
· By the end of 2016, gross global capacity was at 85 million TEU, an increase of approximately 15 million TEU since 2012, and we expect over 100 million TEU of gross capacity by 2020, subject to market demand.
· We expect capital expenditure in 2017 to be $1.2 billion with investment planned into Jebel Ali (UAE), Prince Rupert (Canada), Berbera (Somaliland), Dakar (Senegal) and London Gateway (UK).
Investment partnership and further consolidation in our portfolio
Created $3.7 billion investment platform in partnership with CDPQ and DP World holding 55% share and CDPQ the remaining 45% to invest in ports and terminals globally outside the UAE. Furthermore, DP World seeded the fund with the Canadian container terminals, Vancouver and Prince Rupert, with CDPQ acquiring a 45% stake of the assets for $640 million.