DP World: Trade down broadly; no sign of recovery

[March 25, 2009]  DUBAI, United Arab Emirates (AP) -- Cargo handler DP World said Wednesday that business at its ports dropped 8 percent in the first two months of this year as global trade evaporates because of the global economic slump.

The slowdown shows no signs of easing. The CEO of the Dubai-based company, one of the world's biggest and most geographically diverse port operators, said market conditions are changing on an almost daily basis, making it impossible to predict how badly business might suffer this year.

"Volumes are just disappearing," Chief Executive Mohammed Sharaf said in a round-table with reporters. "It's not that we are losing our business to our competition. ... It's just not there. It's gone."

Trade at the company's ports in the developing world is faring better than in more established regions, where it has seen double-digit declines, he said.

The bleak outlook comes despite strong 2008 sales growth for the rapidly expanding company.

DP World said it earned $530.7 million last year, compared with $1.15 billion in 2007, when it booked a large gain on the sale of U.S. ports to American International Group Inc. amid a political firestorm.

After adjusting for that sale and other items, DP World's profit from continuing operations rose to $620.8 million from $419.7 million in 2007.

Revenue jumped 20 percent year-over-year to $3.28 billion, helped by increased capacity from new operations in Yemen, Senegal, Egypt and Spain.

To cope with the growing drop in shipping, Sharaf said DP World is aiming to cut at least 3 percent of fixed costs from what executives say is already a lean organization, and has laid off a "minimal" number of workers. It also has agreed to accept late payments from some shipping companies struggling to make ends meet in the short term, he said.

The company is also delaying the addition of about 50 percent of new capacity it had planned. Sharaf said all new projects except those due to come online soon are "under review."

That includes expansion of the company's main port in Dubai and a massive complex known as London Gateway set to become Britain's first new deep-sea container port in more than a quarter century.

DP World recently opened a new container port in the tiny African nation of Djibouti and plans to complete cargo terminals it is building in Callao, Peru, and Ho Chi Minh City, Vietnam by early next year.

[Associated Press; By ADAM SCHRECK]

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