DP World well positioned despite global concerns: Moody’s
DP World's solid operational and financial results for H1 2011 show that its operations in emerging markets are generating at least 75 per cent of the group's revenues and will continue underpinning its strengthening credit fundamentals, said Moody's Investors Service, Emirates Business reports.
Despite the greater weight of emerging markets, DP World nevertheless maintains a solid footing in developed markets, with ports supporting logistics and trade activities in a number of western European locations.
These results stand out against a background of wider market concerns about the political turmoil in parts of the Middle East as well as about growth prospects for the major global economies.
According to DP World's H1 2011 results, underlying consolidated throughput and revenues have grown by 11 per cent and 17 per cent, respectively, with all regions contributing, but with emerging markets as the clear driving force.
This includes the full pro-forma consolidation of its Australian ports, of which DP World sold a 75 per cent stake (to Citi Infrastructure Investors) and which were deconsolidated from March 12.
Importantly, stable containerised revenues accounted for 80 per cent of the group's total, further to the addition of handling capacities in India, Pakistan and China.
In addition to volume growth, DP World has continued to focus on cost management and has demonstrated its ability to command price increases (with like-for-like revenues per standard container rising to $93 in H1 2011 against $90 in H1 2010), resulting in a 22 per cent increase in reported EBITDA margins, excluding one-off items.
The H1 2011 results showed that DP World has a healthy cash balance of $4.1 billion as of June 2011 relative to moderate debt maturities to 2017 (except a $3 billion syndicated facility that is scheduled to mature in September 2012).
Moody's also noted that DP World has a management team that has developed a track record of balancing the need to maintain financial flexibility against its own growth aspirations.
Overall, Moody's believes that DP World remains well positioned despite persistent concerns about sovereign debt pressures across Europe and Japan, and about the impact of the US government's challenges related to its federal debt and deficits on the weak economic environment as well as possible spill-over effects on global trade and logistics.
This is because the trade flows of the markets driving DP World's growth - Asia, South America and Middle East - are somewhat decoupled from the economic pressures and uncertainties facing developed markets economies, which is why these three markets are expected to continue to report positive growth. Therefore, DP World's emerging markets focus remains an important underpinning given concerns over how global economic growth is likely to evolve.
DP World currently holds an investment-grade rating of Baa3 with a stable outlook, further to its one-notch upgrade on 11 April 2011.
Despite the greater weight of emerging markets, DP World nevertheless maintains a solid footing in developed markets, with ports supporting logistics and trade activities in a number of western European locations.
These results stand out against a background of wider market concerns about the political turmoil in parts of the Middle East as well as about growth prospects for the major global economies.
According to DP World's H1 2011 results, underlying consolidated throughput and revenues have grown by 11 per cent and 17 per cent, respectively, with all regions contributing, but with emerging markets as the clear driving force.
This includes the full pro-forma consolidation of its Australian ports, of which DP World sold a 75 per cent stake (to Citi Infrastructure Investors) and which were deconsolidated from March 12.
Importantly, stable containerised revenues accounted for 80 per cent of the group's total, further to the addition of handling capacities in India, Pakistan and China.
In addition to volume growth, DP World has continued to focus on cost management and has demonstrated its ability to command price increases (with like-for-like revenues per standard container rising to $93 in H1 2011 against $90 in H1 2010), resulting in a 22 per cent increase in reported EBITDA margins, excluding one-off items.
The H1 2011 results showed that DP World has a healthy cash balance of $4.1 billion as of June 2011 relative to moderate debt maturities to 2017 (except a $3 billion syndicated facility that is scheduled to mature in September 2012).
Moody's also noted that DP World has a management team that has developed a track record of balancing the need to maintain financial flexibility against its own growth aspirations.
Overall, Moody's believes that DP World remains well positioned despite persistent concerns about sovereign debt pressures across Europe and Japan, and about the impact of the US government's challenges related to its federal debt and deficits on the weak economic environment as well as possible spill-over effects on global trade and logistics.
This is because the trade flows of the markets driving DP World's growth - Asia, South America and Middle East - are somewhat decoupled from the economic pressures and uncertainties facing developed markets economies, which is why these three markets are expected to continue to report positive growth. Therefore, DP World's emerging markets focus remains an important underpinning given concerns over how global economic growth is likely to evolve.
DP World currently holds an investment-grade rating of Baa3 with a stable outlook, further to its one-notch upgrade on 11 April 2011.