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DP World PLC - 91SN DP WORLD ANNOUNCES FY2019 FINANCIAL RESULTS Released 07:00 11-Mar-2020

RNS Number : 6703F

DP World PLC

11 March 2020

DP WORLD ANNOUNCES FINANCIAL RESULTS

Adjusted EBITDA growth of 17.7% in 2019

Dubai, United Arab Emirates, 11 March 2020.DP World announces robust financial results for the year ended 31 December 2019. On a reported basis, revenue grew 36.1% and adjusted EBITDA increased 17.7% with adjusted EBITDA margin of 43%, delivering profit attributable to owners of the Company, before separately disclosed items^[1], of $1,328 million, up 4.6% and EPS of 160.0 US cents.

Results before separately disclosed items unless otherwise stated	2019	2018	As reported % change	Like-for- like at constant currency % change[2]
USD million
Gross throughput[3] (TEU '000)	71,248	71,419	(0.2%)	1.0%
Consolidated throughput[4] (TEU '000)	39,930	36,760	8.6%	(0.5%)
Revenue	7,686	5,646	36.1%	2.3%
Share of profit from equity-accounted investees	153	165	(7.1%)	(2.2%)
Adjusted EBITDA[5]	3,306	2,808	17.7%	0.5%
Adjusted EBITDA margin[6]	43.0%	49.7%	-	49.6%[7]
Profit for the period	1,341	1,333	0.6%	5.0%
Profit for the period attributable to owners of the Company before separately disclosed items	1,328	1,270	4.6%	5.4%
Profit for the period attributable to owners of the Company after separately disclosed items	1,189	1,297	-8.3%	-
Basic earnings per share attributable to owners of the Company (US cents)	160.0	153.0	4.6%	-
Ordinary dividend per share (US Cents)	40.0	43.0	-7.0%	-

Results Highlights

Ø Revenue of $7,686 million

§ Revenue growth of 36.1% driven by acquisitions including P&O Ferries (UK), Topaz Energy & Marine (UAE) and the two terminals in Chile (Puerto Central and Puerto Lirquen) as well as the full year impact from Continental Warehousing Corporation (India), Cosmos Agencia Maritima (Peru) and Unifeeder (Denmark), and the consolidation of Australia region.

§ Like-for-like revenue increased by 2.3% driven by 16.0% growth in non-container revenue.

Ø Adjusted EBITDA of $3,306 million and adjusted EBITDA margin of 43.0%

§ Adjusted EBITDA grew 17.7% and achieved an EBITDA margin for the full year of 43.0%.

§ Like-for-like adjusted EBITDA margin was at 49.6.%.

Ø Profit for the period attributable to owners of the Company of $1,328 million

§ Strong adjusted EBITDA growth resulted in a 4.6% increase in profit attributable to owners of the Company before separately disclosed items on a reported basis and 5.4% growth on a like-for-like basis at constant currency.

Ø Strong cash generation and robust balance sheet

§ Cash from operating activities was $2,462 million.

§ Free cash flow (post cash tax maintenance capital expenditure and pre-dividends) amounted to $2,058 million.

§ Leverage (Adjusted Net Debt to adjusted EBITDA) at 3.9 times. Pre IFRS 16 leverage stands at 3.4 times.

Ø Proposed Total dividend per share of 40 US cents

§ Proposed ordinary dividend of 40 US cents which is broadly in line with historic pay-out ratio.

Ø Bond Transaction Executed at Record Levels

§ Raised $2.3bn through issuance of long-term bonds at record low rates to remove refinancing risk.

§ Further strengthens balance sheet and offers financial flexibility.

Ø Continued Investment Across the Portfolio

§ Ports & Terminals investments include two new terminals in Chile (Puerto Central and Puerto Lirquen) and consolidation of terminals in Australia.

§ Logistics investment includes acquisition of Pan-European logistics platform of P&O Ferries and Marine logistics operator, Topaz Marine & Energy.

§ Capital expenditure of $1,146 million invested across the existing portfolio.

§ In 2019, gross global capacity was at 91.8 million TEU. Consolidated capacity was at 54.2 million TEU.

§ Capital expenditure guidance for 2020 is up to $1.4 billion with investments planned in UAE, Prince Rupert (Canada), London Gateway (United Kingdom), Jeddah (Saudi Arabia), Callao (Peru), Sokhna (Egypt) and Berbera (Somaliland).

§ Posorja, the only deep-water port in Ecuador with capacity of 750k TEU opened on time and on budget.

§ 30-year concession renewal at Jeddah Islamic Port, largest port and hub that connects East-West cargo in the Kingdom of Saudi Arabia.

Ø Global trade outlook uncertain

§ Global trade outlook remains uncertain due to supply chain disruption caused by Covid-19 outbreak.

§ We continue to focus on maintaining our disciplined approach to investment to deliver integrated supply chain solutions to cargo owners.

§ Looking ahead into 2020, we will focus on integrating our recent acquisitions and managing costs to protect profitability.

DP World Group Chairman and CEO, Sultan Ahmed Bin Sulayem, commented:

'DP World is pleased to report like-for-like earnings growth of 5.4% in 2019 and attributable earnings of $1,328 million. Adjusted EBITDA grew 17.7% to $3,306 million with margins at 43.0% on a reported basis and 49.6% on a like-for-like basis. This performance has been delivered in an uncertain trade environment, once again highlighting the resilience of our portfolio.

We have continued to make progress on our strategy to deliver integrated supply chain solutions to cargo owners and have focused our efforts on building end-to-end capabilities for several verticals including the Automotive, Oil & Gas and FMCG industries. We are pleased to state that cargo owners have responded positively, and we are now delivering efficient solutions to our customers, which bodes well for the future.

More recently, after much deliberation, DP World has taken the decision to announce its plans to de-list its equity from the stock exchange and return to private ownership. The strength and resilience that our business continually demonstrates throughout the cycles is due to the investment the Group has made over the years in response to changes in our industry. Our ability to adapt and change has been the key to our success, and we must continue to evolve for continued success. We believe this long-term approach to business is not aligned with the short term thinking of equity markets and consequently the next stage of DP World's development will take place as a private company.

'Following the planned delisting, the leverage on the balance sheet will rise temporarily but we are confident of de-leveraging as we remain committed to a strong investment grade rating in the medium term. The business continued to generate high levels of cash flow and combined with more disciplined investment and potential capital recycling, we have enough flexibility to maintain a strong balance sheet. Our immediate focus is to integrate our acquisitions and explore synergies with the objective of providing a range of smart end-to-end solutions which will improve the quality of our earnings and drive returns.

'The near-term outlook remains a cause for concern with global trade disputes, Covid-19 outbreak and regional geo-politics, causing disruption to trade. However, DP World is well positioned to respond in the short term by focusing on disciplined investment and managing the cost base to protect profitability. Overall, we remain positive on the medium to long term outlook of the industry.

Finally, the Board of DP World recommends a dividend of $332.0 million at 40 US cents per share, which is in line with past policy of maintaining a payout ratio of at least 20%.'

- END -

Investor Enquiries:

Redwan Ahmed Amin Fikree

DP World PLC DP World PLC

Mobile: [phone] Mobile: [phone]

Direct: [phone] Direct: [phone]

[e-mail] [e-mail]

11^th March 2020, 12pm UAE, 8am UK Conference Call

§ Conference call for analysts and investors hosted by Redwan Ahmed.

§ A playback of the call will be available after the 12pm conference call concludes. For the dial in details and playback details please [e-mail].

§ The presentation accompanying these conference calls will be available on DP World's website within the investor centre.www.dpworld.comfrom approximately 9am UAE time this morning.

Forward-Looking Statements

This document contains certain 'forward-looking' statements reflecting, among other things, current views on our markets, activities and prospects. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur and which may be beyond DP World's ability to control or predict (such as changing political, economic or market circumstances). Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of DP World speak only as of the date they are made, and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Except to the extent required by law, DP World does not undertake to update or revise forward-looking statements to reflect any changes in DP World's expectations with regard thereto or any changes in information, events, conditions or circumstances on which any such statement is based.

Group Chairman and CEO Statement

Global Trade Resilient Despite Headwinds

2019 has been dominated by the trade dispute between China and US, and while this has caused uncertainty, it is pleasing to see that container volumes still grew albeit in low-single digits. The near-term outlook for the container market currently may appear uncertain given the supply chain disruption caused by the outbreak of the Covid-19 virus but history suggests that trade will remain robust and recover after a period of uncertainty, and we remain positive on the medium to long term outlook for the market.

We aim to respond to the near term uncertainty by managing costs, while focusing on integrating our acquisitions to explore revenue synergies and drive earnings growth. Being financially disciplined has served us well over the years and it remains a priority to manage the growth opportunities whilst retaining a strong balance sheet. A portfolio focused on high value cargo and faster growing markets has delivered consistent financial performance and we aim to retain the shape of our portfolio that has a 70% exposure to origin and destination cargo and 75% exposure to faster growing markets.

Supply Chain Solutions

In 2019, we have focused on building our end-to-end capabilities in order to deliver an integrated supply chain solutions product that allows us to connect directly with end customers. To complement this strategy, we have made investments including P&O Ferries, Marine logistics operator Topaz Energy & Marine and short sea logistics provider Feedertech.

In Europe, our strategy is to provide efficient connectivity to and from hubs to end markets. P&O Ferries and Ferrymasters, which offer pan-European Ro-Ro (Roll-on Roll-off) short sea and landside connectivity will compliment Unifeeder which provides Lo-Lo (lift-on lift-off) short sea connectivity. The assets are highly complementary and combined with our significant port assets, it provides a platform to offer a compelling product to end cargo owners.

When we acquired Unifeeder, we stated that it was a product that could be scaled in new markets and the acquisition of Feedertech was the first step in this strategy. Feedertech is an asset-light business similar to Unifeeder and operates in the fast-growing trade route between Asia, Indian Subcontinent and Middle East. Longer-term we expect the short sea business to gain market share due to its ability to deliver a more sustainable product and we to continue to grow this product offering.

In addition to these investments, we continue to invest in container port terminals including the winning of the 30-year concession for the South Container terminal at Jeddah Islamic Port. DP World will invest $500 million to improve and modernise Jeddah port. Furthermore, we announced a major entry into Chile, Latin America's most developed economy, with the acquisition of two terminals in Puerto Central (San Antonio) and Puerto Lirquen (Region VIII), which allows us to serve cargo owners at five major gateway terminals in the west coast of South America. We have also consolidated our position once again in Australia by taking a controlling stake, where we believe there is an opportunity to expand beyond ports into logistics. In Ecuador, we started operations at our new greenfield deep-water container port in Posorja with a capacity of 750k TEU's. The new Port and Special Economic Zone will significantly improve Ecuador's global competitiveness and position the country as a dynamic business hub for the west coast of South America.

2019 has also been a year with a focus on technology as we invest to build an intelligent platform that allows cargo owners to trade directly. Providing digital logistics services in real time is now a reality, and we remain focused on delivering an easy interface for cargo owners, freight forwarders and ocean freight liners who can use the platform to move products via sea, land and air.

Other innovation included the launch of intelligent High Bay Storage (HBS) system that aims to deliver the capacity of a conventional terminal in a third of the surface area. The patented design and rack structure of the system creates unique advantages and will change the way future ports are built.

In terms of capital expenditure, we invested $1,146 million in the year, below the guidance of $1,400 million as we curtailed spending given the uncertain trade environment. Our investment focused on UAE, Posorja (Ecuador), P&O Ferries (UK), Berbera (Somaliland), Sokhna (Egypt) and London Gateway (UK).

Capacity

Globally we added approximately 1.3 million TEU's of new gross capacity in 2019 to take our total gross capacity to 92 million TEU's. Consolidated capacity grew to 54 million TEU in 2019, compared to 50 million TEU in 2018 mainly due to the consolidation of Australia. By the end of 2020, we anticipate that we will have approximately 95 million TEU of capacity across our portfolio and we expect to add capacity in line with demand.

Group Chief Financial Officer's Review

DP World has delivered a solid set of financial results in 2019 despite challenging market conditions with continued strong cash generation as profit attributable to owners of the Company increased 4.6% to $1,328 million. Our adjusted EBITDA increased by 17.7% to $3,306 million, resulting in an adjusted EBITDA margin 43.0% against an adjusted EBITDA margin of 49.7% in 2018. The year-on-year margin dilution is due to continued mix change effect as lower margin businesses have now been consolidated into our portfolio. This trend will continue as we add more asset-light logistics businesses such as Feedertech.

It has been another year of progress in building our end-to-end supply chain solutions capability as we acquired P&O Ferries and Topaz Energy & Marine. These assets will provide a platform to deliver smart solutions to cargo owners across key verticals and have been the key driver of the top line, with reported revenue growing by 36.1%. In contrast, the more modest like-for-like performance reflects the headwinds the industry is facing. Like-for-like revenues grew by 2.3% while consolidated volumes fell by 0.5%, resulting in a like-for-like adjusted EBITDA growth of 0.5% with like-for-like margins relatively steady at 49.6%. Overall the business continued to show resilience.

Regional Review

Middle East, Europe and Africa

Results before separately disclosed items	2019	2018	% change	Like-for-like at constant currency % change
USD million
Consolidated throughput (TEU '000)	23,246	23,794	(2.3%)	(1.9%)
Revenue	5,669	4,007	41.5%	8.2%
Share of profit from equity-accounted investees	20	33	(40.8%)	(34.1%)
Adjusted EBITDA	2,726	2,104	29.6%	12.2%
Adjusted EBITDA margin	48.1%	52.5%	-	57.4%7

Market conditions in the Middle East, Europe and Africa (EMEA) region, excluding UAE, were positive, with volume growth driven by London Gateway (UK) and Yarimca (Turkey) while Berbera (Somaliland) and Jeddah (Saudi) also delivered strong performance. UAE volumes were softer due to the loss of lower margin throughput, with our main focus on profitable cargo.

Overall, revenue in the region grew 41.5% to $5,669 million on a reported basis, benefitting from acquisitions and land sale transactions. Adjusted EBITDA was $2,726 million, up 29.6% compared to 2018. On a like-for-like basis, revenue grew 8.2% and adjusted EBITDA was up 12.2%.

In 2019, we invested $731 million of capital expenditure in the region, which was mainly focused on the UAE, London Gateway (UK), Sokhna (Egypt), Berbera (Somaliland) and P&O Ferries (UK).

Asia Pacific and India

Results before separately disclosed items	2019	2018	% change	Like-for-like at constant currency % change
USD million
Consolidated throughput (TEU '000)	9,316	8,810	5.7%	5.7%
Revenue	616	678	(9.3%)	(14.7%)
Share of profit from equity-accounted investees	108	129	(16.1%)	10.1%
Adjusted EBITDA	348	502	(30.7%)	(25.1%)
Adjusted EBITDA margin	56.5%	73.9%	-	61.1%7

Asia Pacific and India region market conditions were broadly positive despite the trade dispute. Container volumes in India continue to be driven by a positive macro environment and our logistics investments are driving revenue growth. The port of Pusan (South Korea) continues to deliver solid growth.

On a like-for-like basis, revenue and adjusted EBITDA decreased by 14.7% and 25.1% respectively mainly due to the non-recurrence of the release of provisions which boosted 2018 EBITDA.

Share of profit from equity-accounted investees (joint ventures) was lower by 16.1% to $108 million in 2019 mainly due to the concession expiry at Surabaya (Indonesia) in April 2019.

Capital expenditure in this region during the year was $69.4 million, which was invested in Pusan (South Korea) and Nhava Sheva (India).

Australia and Americas

Reported results before separately disclosed items	2019	2018	% change	Like-for-like at constant currency % change
USD million
Consolidated throughput (TEU '000)	7,368	4,157	77.3%	(3.7%)
Revenue	1,402	961	45.8%	(6.8%)
Share of profit from equity-accounted investees	26	3	N/A	(10.6%)
Adjusted EBITDA	437	340	28.5%	(14.3%)
Adjusted EBITDA margin	31.2%	35.4%	-	33.8%7

Market conditions in the Australia and Americas region were mixed, with strong volume growth in Prince Rupert (Canada) and Callao (Peru) offset by weakness in Buenos Aires (Argentina) and Sydney (Australia).

Revenue rose 45.8% to $1,402 million and adjusted EBITDA increased by 28.5% to $437 million due to the consolidation of Australia and the acquisition of two ports in Chile. On a like-for-like basis, revenue fell by 6.8% and adjusted EBITDA decreased by 14.3% year on year due to weakness in Argentina.

Profit from equity-accounted investees was $26 million compared to $3.0 million in 2018, driven by the consolidation of Australia which reported a net loss in the prior period.

We invested $301 million of capital expenditure in the region, mainly in our terminal in Posorja (Ecuador).

Cash Flow and Balance Sheet

The 2019 accounts are impacted by the adoption of IFRS 16. Gross debt has risen by $5.9 billion since the year-end to $16.5 billion, with lease liabilities accounting for $2.5 billion of the increase. The balance of the increase is mainly due to $2.3bn the issuance of bonds and debt acquired with acquisitions. During the year we exercised a liability management exercise on our 2024 convertible bond and redeemed $746 million. Cash on balance sheet stood at $2.9 billion resulting in adjusted net debt of $12.9 billion. Excluding IFRS lease liabilities, net debt stands at $10.3 billion. Our net leverage stands at 3.9 times post IFRS 16 and is 3.4 times on a pre-IFRS basis. Looking ahead, leverage will rise post successful de-listing but the business is committed to deleveraging below 4x Net Debt/ EBITDA (pre IFRS 16) and a strong investment grade rating. Cash generation from operations remains strong at $2,462 million.

Capital Expenditure

In 2019, our capital expenditure reached $1,146 million across the portfolio compared to $908 million in 2018, as we invested in our assets in the UAE, Posorja (Ecuador), London Gateway (UK), Sokhna (Egypt), Berbera (Somaliland) and P&O Ferries (UK) amongst others. Maintenance capital expenditure stood at $196 million compared to $140 million in 2018.

The capital expenditure in 2019 was below our guidance of $1.4 billion as we maintain a disciplined approach to deploying capital. We expect 2020 capital expenditure to be up to $1.4 billion with investment planned mainly into UAE, Prince Rupert (Canada), London Gateway (UK), Jeddah (Saudi Arabia), Callao (Peru), Sokhna (Egypt), Berbera (Somaliland) and Maritime Logistics.

Sultan Bin Sulayem Group Chairman and Chief Executive Officer

Yuvraj Narayan Group Chief Financial, Strategy and Business Officer

About DP World

We are the leading provider of smart logistics solutions, enabling the flow of trade across the globe. Our comprehensive range of products and services covers every link of the integrated supply chain - from maritime and inland terminals to marine services and industrial parks as well as technology-driven customer solutions.

We deliver these services through an interconnected global network of 127 business units in 51 countries across six continents, with a significant presence both in high-growth and mature markets. Wherever we operate, we integrate sustainability and responsible corporate citizenship into our activities, striving for a positive contribution to the economies and communities where we live and work.

Our dedicated, diverse and professional team of more than 56,000 employees from 134 countries are committed to delivering unrivalled value to our customers and partners. We do this by focussing on mutually beneficial relationships - with governments, shippers, traders, and other stakeholders along the global supply chain - relationships built on a foundation of mutual trust and enduring partnership.

We think ahead, anticipate change and deploy industry-leading technology to create the smartest, most efficient and innovative trade solutions, while ensuring a positive and sustainable impact on economies, societies and our planet.

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http://www.rns-pdf.londonstockexchange.com/rns/6703F_1-2020-3-10.pdf

[1]Before separately disclosed items (BSDI) primarily excludes non-recurring items.DP World reported separately disclosed items loss of$146.9million in 2019.

[2] Like-for-like at constant currency is without the new additions at Puerto Central and Puerto Lirquen (Chile), P&O Ferries and Ferrymasters (UK), Topaz Energy & Marine (UAE) and Posorja (Ecuador). For the acquisitions made during the year 2018, i.e., Continental Warehousing (India), Cosmos Agencia Marítima (Peru) and Unifeeder (Denmark), and Discontinuation of Surabaya (Indonesia), Doraleh (Djibouti) and Tianjin (China), a similar period is compared in 2019. The consolidation results of DP World Australia in 2019 is compared with similar period in 2018. The impact of IFRS 16 is given effect from 1st Jan 2018 for like-for-like.

[3] Gross throughput is throughput from all consolidated terminals plus equity-accounted investees.

[4] Consolidated throughput is throughput from all terminals where the Group has control as per IFRS.

[5] Adjusted EBITDA is Earnings before Interest, Tax, Depreciation & Amortisation and including share of profit from equity-accounted investees before separately disclosed items.

[6]The adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.

[7]Like-for-like adjusted EBITDA margin.

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DP WORLD ANNOUNCES FY2019 FINANCIAL RESULTS - RNS