DP World, one of the world's largest port operators, is delaying the expansion of Dubai's Jebel Ali port, its main facility, because of "softer market conditions," the company said on Thursday.
A plan to add 1.5 million twenty-foot TEUs of capacity to Terminal 3 at Jebel Ali will be delayed into 2017, while expansion of Terminal 4 will also be slowed, DP World said without giving details.
The company had announced in July 2015 that it would invest $1.6 billion in Terminal 4, which was to be completed by 2018. Jebel Ali handles shipments not only for the United Arab Emirates but for much of the region.
Since last year, however, growth in the oil-rich economies of the Gulf has slowed because of low oil prices.
"(The) global trade environment remains challenging including for Jebel Ali port," DP World said on Thursday, adding that the company handled 7.4 million TEUs of cargo in the UAE during the first half of 2016, down six percent from a year ago.
DP World had previously disclosed that its consolidated throughput for the first half - volumes at ports which DP World controls around the world - was 14.6 million TEUs, down 1.4 percent.
Also on Thursday, DP World reported a 50 percent jump in net profit attributable to shareholders during the first half to $608 million, helped by the acquisitions of Dubai's Jebel Ali Free Zone and Canada's Fairview Terminal.
DP World's revenue for the first half was $2.09 billion, up from $1.90 billion a year earlier.
DP World Group Chairman and CEO, Sultan Ahmed Bin Sulayem, commented: “DP World is pleased to announce a strong set of first half results, with 50 percent year-on-year earnings growth, and 56 percent adjusted EBITDA margins. The more modest like-for-like earnings growth is a reflection of the challenging trade environment. This financial performance has been achieved despite uncertain market conditions, which once again demonstrates the resilient nature of our portfolio.
“In 2016, we have invested $586 million of capex in key growth markets, and this investment leaves us well placed to capitalize on the significant medium to long-term growth potential of this industry.
“We will maintain the existing shape of our ports portfolio that has a 70 percent exposure to origin and destination cargo and 75 percent exposure to faster growing markets. This positioning will enable us to deliver both earnings growth and shareholder value over the long term.”
“The outlook for trade growth remains uncertain, however, we believe our portfolio is well positioned to continue to outperform the market. We remain focused on delivering relevant new capacity in the right markets through disciplined investment, improving efficiencies and managing costs to drive profitability.
“Looking ahead to the second half of the year, we expect throughput performance to improve, and like-for-like financial performance (excluding one-off items and foreign exchange movements) to be similar to the first half. Overall, the strong financial performance of the first six months leaves us well placed to meet full-year market expectations.”
DP World in June said it had won a 50-year concession to develop a port project in Ecuador that would require initial investment of $500 million. The project would be conducted with DP World's local partners, Consorcio Nobis and Grupo Vilaseca.
The firm was also awarded in April a 25-year concession by the Cypriot government for the exclusive rights to operate Limassol port, in partnership with Cypriot company GAP Vassilopoulos Public.