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Tue 23 Mar 2010 04:28 PM

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DP World sees upturn after 2009 profit nearly halves

UPDATE 2: 2009 profit on continuing ops $333m vs $621m in 2008.

DP World sees upturn after 2009 profit nearly halves
(Getty Images)

Port operator DP World, a unit of troubled state-owned conglomerate Dubai World, said it was seeing signs of recovery after posting a 46 percent drop in 2009 profit.

The company said on Wednesday its plans to list on the London Stock Exchange (LSE) were on track and raised its dividend by 19 percent in a surprise move that helped lift shares to a seven-week high.

The company's results come as its debt-laden parent, Dubai World [DBWLD.UL] prepares to present its plan to restructure its $26 billion debt to creditors, with details expected to emerge as early as Wednesday.

"We are not only impacted by Dubai World but Dubai and globally. Rating agencies took actions against government-related entities and we were impacted," the company's finance chief, Yuvraj Narayan, told journalists.

Dubai's debt woes have pushed up the cost of borrowing for many Gulf firms and foreign investors have become more wary of the region, while the global crisis has depressed the type of cross-border trade that fuels DP World's core business.

DP World, which is not included in Dubai World's debt restructuring plan, is one of the largest port operators in the world and is 77 percent owned by state-linked conglomerate.

DP World said net profit from continuing operations fell to $333 million for the period ended Dec. 31 from $621 million in 2008 and ahead of a forecast of $295 million from Thomson Reuters.

The company raised its dividend to 0.82 cent.

"We are seeing positive signs of recovery," the company said in a statement. "However, it is still too early in 2010 to confirm sustainability as the macroeconomic environment and global trade patterns remain unpredictable."

The LSE listing is not to raise additional capital but to provide additional liquidity, Chief Executive Mohammed Sharaf told journalists.

Sharaf declined to say whether the parent company was planning to offload part of its stake through the London listing.

"The ultimate decision is with the shareholder," he said.

Analysts cheered the results with many saying the London listing would boost shares.

"We expect the London listing, although most likely delayed till third quarter 2010, will provide underlying support to liquidity over the medium term," Ian Munro, MAC Capital head of research wrote in a research note.

DP World said it had no major refinancing needs until a $3 billion revolving credit facility comes due in October 2012.

The company also said its London listing would be via depository interests, in pounds sterling. Shareholders will be asked to approve an amendment at DP World's April 26 annual meeting to allow the listing.

Revenue fell to $2.8 billion on a decline in container volumes, which fell 8 percent, and pricing pressure. The group had revenue of $3.28 billion in 2008. (Reuters)

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