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Wed 28 Jan 2009 10:19 AM

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Long-term outlook positive for DP World - Citi

Analysts remain optimistic about future growth potential for port operator.

The long-term industry fundamentals for Dubai-based port operator DP World remain positive, despite the challenges it will face this year, analysts at Citigroup said.DP World, which is the world’s fourth-largest port operator, can depend on the high-growth nature of the sector with predictable and stable cash flows, analysts wrote in a research note.

“We expect DP World to seek further terminal concessions and bolt-on acquisitions, afforded by a rapidly deleveraging balance sheet,” they said.

“Jebel Ali, with its 99-year concession to 2105, is the high-margin, high-growth jewel, with significant expansion potential.”

The port operator announced on Monday that it would review its expansion plans and freeze recruitment as growth slows in 2009.

DP World indicated in an investor call that only a handful of ports showed growth in the fourth quarter of 2008 compared with the previous quarter and 2007, Citigroup said.

Terminals in Asia and Europe were most impacted, while those in Australia and the Middle East proved the most resilient.

Nevertheless, DP World expects 2008 profits to be “well ahead” of 2007, indicating that its profit before tax would be up by at least 30 percent.

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Rob Oher 11 years ago

Is there anyone out there with half a brain that still takes the opinion of an analyst from Citibank seriously. We are talking about the same Citi where they lost billions and billions of dollars and got others to lose billions and billions of dollars on really really stupid things. An opinion from an employee of a bankrupt company should not count as news.