DP World says there is little opportunity for profit in US ports sector
DP World remains interested in port and logistics acquisitions in the United States market, but has not yet found an opportunity for profit in that market, according to chairman Sultan Bin Sulayem.
“As far as the United States, there’s nothing to stop us from going there, but we haven’t found an opportunity that is profitable,” he said at a press conference announcing the group’s 2018 financial results.
Bin Sulayem said that DP World is currently studying “a few acquisition opportunities” across the world, but could not disclose more details on those or confirm that they will be completed.
Yuvraj Narayan, DP World’s chief financial officer, said that the company isn’t necessarily eyeing ports in the US, but will do what it needs to be able to access the country’s large consumer market.
Asked about the location of any upcoming deals or where the company sees growth potential, Sulayem said Latin America was still a “very important” market.
DP World’s existing operations in Latin America include a 50-year concession in Ecuador, investing over US $1 billion in developing maritime trade infrastructure, with plans to develop a logistics zone to create a regional trading hub in Posorja.
It also operates DP World Santos in Brazil, the busiest container port in the region. Other locations include DP World Callao in Peru; DP World Caucedo in the Dominican Republic, which is attracting 3PLs and global retailers with a multimodal logistics platform and in-house port community system and a terminal in Buenos Aires, Argentina.
In 2018, DP World spent US $2.5 billion on acquisitions, closing deals to buy Drydocks World, Dubai Maritime City, Cosmos Agencia Maritima, and Continental Warehousing Corporation.
DP World invested US $908 million in 2018 in capital expenditure, below its expected US $1.4 billion as it curtailed spending “in response to the uncertain trade environment.”
The capital expenditure focused on its ports in the UAE, Ecuador, Somaliland, Egypt, and the United Kingdom. This year, the company plans to spend up to $1.4 billion capital expenditure, focusing on the UAE, Ecuador, Somaliland, Congo, and Egypt.
Sulayem said that in 2019 he expects to see increased financial contribution from its new investments.
He added that global trade is expected to grow at around three to four per cent in 2019, after growing at four per cent in volume terms in 2018.