COVID-19 impact will hit in Q2 2020

DP World reported stable volumes in Q1 2020 but said the outlook was concerning and challenging. DP World PLC handled 17.2m TEU (twenty-foot equivalent units) across its global portfolio of container terminals in the first quarter of 2020, with gross container volumes decreasing by 1.7% year-on-year on a reported basis and up 0.3% on a like-for-like basis.

At a consolidated level, its terminals handled 10.3m TEU during the first quarter of 2020, increasing 12.9% on a reported basis and up 0.9% year-on-year on a like-for-like basis.

Group chairman and CEO, Sultan Ahmed Bin Sulayem, commented: “While DP World has delivered a resilient performance in 1Q2020 with like-for-like throughput broadly flat year-on-year, the real impact of covid-19 will be seen from 2Q2020 onwards. Global trade and container volumes are forecast to decline in 2020 and the wide range of estimates by industry specialists (Drewry -3%, Sea-Intel -10%) further emphasizes the short-term uncertainty faced by our sector. Similarly, the timing of any recovery is uncertain with trade expected to pick-up as and when global economic activity normalises.

“Given the more challenging environment, our near-term focus is on integrating our recent acquisitions to drive synergies, containing costs to protect profitability, managing growth capex to preserve cashflow and maintaining our investment grade rating.”

He added that DP World has been able to minimise operational disruption due to its investment in digital technology and automation.

“Overall, the outlook is a cause for concern, but we remain positive on the long-term fundamentals of the industry. Furthermore, our strategy of providing integrated supply chain solutions to beneficial cargo owners leaves us well placed to benefit early from any sustained recovery in the global economy,” Mr Bin Sulayem added.