DP World Limited Investor Presentation September 2018

Transcription

1 DP World Limited Investor Presentation September 2018

2 Table of Contents 1 Company Overview 4 2 Industry Overview 7 3 1H 2018 Financial Results Overview 9 4 Throughput Overview 14 5 Debt Position & Maturity Profile 15 6 Dubai and Jebel Ali Port & Free Zone 17 7 Key Capacity Additions 20 8 Financial Highlights & Metrics 21 9 Strategic Acquisitions Sustainability & Key Environmental Initiatives 29

3 Our Journey From Local to Regional to Global Port Operator : Local port operator Development of Port Rashid (Dubai, UAE) Opening of Jebel Ali Port (Dubai, UAE) Port Rashid and Jebel Ali Port operations combined creating Dubai Ports Authority (DPA) : Regional port operator Dubai Ports International FZE (DPI) formed Concessions won in Jeddah (Saudi Arabia) and Doraleh (Djibouti) Concession won in Visakhapatnam (India) Concession won in Constanta (Romania) Concession won in Cochin (India) : Global port operator CSX World Terminals acquired The Peninsular & Oriental Steam Navigation Company (P&O) acquired 2006/7. Global network and market position increased in Asia, India, Australia, the Americas, Europe and Africa DP World listed on NASDAQ Dubai : DP World London Gateway port welcomes first vessel Acquired of Economic Zones World FZE (EZW) Acquired Prince Rupert Container Terminal (Canada) 2016-: Lease agreement for Rodney Container Terminal in St. John (Canada) 30 year concession for Port of Berbera (Somaliland) 50 year concession for greenfield multi-purpose port project in Posorja (Ecuador) Partnership with CDPQ to create US$ 3.7bn Investment Platform Consolidated stake in Pusan Newport Company Limited with 66.03% ownership London Gateway wins first Asia- Europe service and opens third berth Jebel Ali Port adds 1.5m TEU to T3 and reaches 19.5m TEU total capacity Consolidated DP World terminal in Santos Brazil with 100% ownership. 2018: Our Journey Continues Closing of Dubai Maritime City and Drydocks World acquisitions (UAE) Created investment platform with NIIF of up to US$ 3bn to invest in ports, transportation and logistics sector in India Joint acquisition of logistics business Continental Warehousing Corporation (India) with NIIF Acquisition of logistics business Cosmos Agencia Marítima (Peru) 30 year concession for greenfield multi-purpose port in Banana (Democratic Republic of the Congo) 20 year concession for logistics hub in Bamako (Republic of Mali). 100% acquisition of Unifeeder Group, the largest container feeder and growing shortsea network operator in Europe. 3

4 DP World Overview DP World is the only listed global container port operator Over 78 terminals across six continents. 8 new developments and major expansions. 70% of total revenue generated by container port operations. DP World operates container terminals through long term concession agreements Average life of port concessions is approximately 36 years in reality they are perpetual as historically concessions have been renewed should they meet our returns criteria. Very high barriers to entry. 9% market share (based on world container throughput) 1. DP World focuses on origin and destination cargo which has pricing power Over 70% of our gross volumes were O&D in and have to go through our ports. Shipping lines do not dictate our volumes imports and exports do. DP World focuses on the faster growing markets and key trade routes Approximately 75% of our volumes generated from emerging or frontier markets in. Diversified portfolio. Strong presence in key East-West trade route. 4

5 Our Global Footprints 5

6 F 2019F 2020F 2021F 2022F Globalisation and the growth of the Container World container traffic vs. World GDP More than 90% of cargo is transported on Sea 15.0% 10.0% 5.0% 0.0% Container volumes growing at a multiple to GDP -5.0% -10.0% Container Volume Growth Global GDP Growth Container Ports Characteristics Resilient volumes, high cash generation, and limited operators. Light regulation cost of container handling is less than 10% of total transport logistics. High entry barriers capital expenditure heavy, strategic assets. Concessions are perpetual in practice. Why does a multiplier exist? Distance between manufacturing and consumption location requires transhipment which leads to containers being handled more than once. Trade imbalance leads to empty repositioning. Low container penetration rates in emerging markets. 1 World GDP data from the IMF World Economic Outlook Update April Global Container Throughput Growth data reported from Drewry Maritime Research June 2018 Report. 6

7 Maintaining Differentiation from Peers Operator Throughput Market Share Equity TEU * Market Share Capacity China Cosco Shipping (1) % 4.7% Key Focus Around 75% of activity generated by merging markets Mainly focused on China although rapid expansion internationally Primarily gateway, limited exposure to transhipment Large investment in the One Belt and Road initiative Hutchinson Port Holdings (2) % 6.3% Significant exposure to transhipment in Hong Kong High volumes in China, limited in North America & Africa Exposed to slow growth in Hong Kong cargo APM Terminals % 5.3% Exposed to one shipping line more than 50% of revenue Primarily gateway (some transhipment exposure) Significant presence in mature markets (Europe & North America), no presence in Oceania. PSA International % 7.5% Significant exposure to transhipment especially in Singapore Mix of mature & emerging markets, strong home base in Singapore No presence in Africa and North America, limited presence in Latin America Increasing portfolio expansion plans (greenfield) and development of capacity at existing locations e.g. Singapore DP World % 5.7% (3) 86.9 Primarily origin and destination cargo (75%) with pricing power Emerging market focus and strong presence in Europe High global presence, limited in North America Expansion in emerging and mature markets Only operator with activities in all 12 world regions and remains the leading player in the Middle East by a large margin. Source: Drewry Maritime Research 2018 Annual Report. *Equity TEU adjusts figures to match the % ownership of terminals. (1) Cosco figure does not include OOCL as acquisition not finalised during (2) Hutchison figure include HPH Trust volumes (3) DP World equity league ranking: #4 in 2014 and #3 for 3 consecutive years (2015, 2016 & ). 7

8 Containerisation Penetration Rates Remain Low Region / country port throughput (mn TEU) Estimated population in (mn People) Container / thousand capita in (TEU / 000 people) China 235 1, UK North America Europe 129 1, WORLD 745 7, Latin America Brazil Russia Africa 26 1, India 15 1, Notes: Port throughput figures include gateway and transhipment volumes Significant volumes of unitised traffic also move in ro-ro mode in some countries e.g. UK Source: Drewry Maritime Research 2018 Annual Report 8

9 Overview of 2018 Interim Financial Results Results before separately disclosed items (1) unless otherwise stated USD million 1H H As Reported % change % change Like-for- like at constant currency (2) Gross throughput (3) (TEU 000) 35,620 33, % 6.0% Consolidated throughput (4) (TEU 000) 18,576 17, % 4.5% Revenue 2,626 2, % 3.0% Share of profit from equity-accounted investees % 17.2% Adjusted EBITDA (5) 1,322 1, % 4.2% Adjusted EBITDA (6) margin % 50.3% 53.4% % (7) Profit for the period (7.9%) 2.4% Profit for the period attributable to owners of the Company (2.1%) 5.2% Profit for the period attributable to owners of the Company after separately disclosed items % - 1 Before separately disclosed items (BSDI) primarily excludes non-recurring items. DP World reported a profit in separately disclosed items of $48 million. 2 Like-for-like at constant currency is without the new additions at Berbera (Somaliland), Limassol (Cyprus), Drydocks World (UAE), Dubai Maritime City (UAE), Cosmos Agencia Marítima (Peru), Reyser (Spain); the discontinuation of Doraleh (Djibouti), Saigon (Vietnam), ISS (Pakistan); and normalizes for the consolidation of DP World Santos (Brazil). 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 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, including our share of profit from equity-accounted investees. 7 Like-for-like adjusted EBITDA margin. 9

10 Continued growth Revenue and EBITDA growth Revenue growth of 14.4% supported by the volume growth across all three regions and the new acquisitions such as Drydocks World LLC (Drydocks), Dubai Maritime City (DMC) and Cosmos Agencia Marítima (CAM). Like-for-like revenue increased by 3.0% driven by a 4.6% increase in total containerized revenue. Adjusted EBITDA grew 7.9% and EBITDA margin for the half year at 50.3%. Like-for-like adjusted EBITDA grew 4.2% with a margin of 54.4%. Strong cash generation, robust balance sheet and rating upgrade Cash from operating activities remains strong at $979 million in 1H2018. Leverage (Net debt to annualised adjusted EBITDA) increased to 2.9 times from 2.6 times at 1H. DP World was again upgraded by the rating agency Moody s from Baa2 to Baa1 with a stable outlook. Fitch Ratings also upgraded DP World from BBB to BBB+ in July. Both rating agencies have upgraded DP World by two notches in 2 years. Continued investment in long-term assets and recent acquisitions Capital expenditure of $439 million invested across the portfolio during the first half of the year. Capital expenditure guidance for 2018 remains unchanged at up to $1.4 billion with investments planned into UAE, Posorja (Ecuador), Berbera (Somaliland), Sokhna (Egypt) and London Gateway (UK). The acquisition of Drydocks is performing in line with expectations and we have seen increased contribution to our revenue line. Expansion into complementary sectors At 1H2018, non-containerized revenue accounted for approximately 37% of total revenue, up from 31% in 1H. Acquired three more strategic assets the integrated multimodal logistics players Continental Warehousing Corporation (CWC) in India, Cosmos Agencia Marítima in Peru, and the Unifeeder Group* in Denmark, which operates the largest container common user feeder and growing shortsea network in Europe. * Unifeeder Group acquisition was announced after 30 June 2018 (1H2018). 10

11 Update on key developments and acquisitions Continental Warehousing Corporation (India) DP World and NIIF joint venture acquired 90% of Continental Warehousing Corporation (CWC) in India. CWC is a leading integrated multimodal logistics provider of Warehousing, Container Freight Stations (CFS), Inland Container Depots (ICD), Private Freight Terminals (PFT) and integrated logistics solutions. The acquisition will further enhance DP World s presence in the entire logistics value chain in India. Cosmos Agencia Marítima (Peru) Banana (Democratic Republic of the Congo) Bamako (Republic of Mali) Unifeeder Group (Denmark) DP World acquired 100% of Cosmos Agencia Marítima (CAM) in Peru, which owns a fully integrated logistics service business (Neptunia S.A and Triton Transport S.A) that offers end-to-end solutions to its customers. In addition to the maritime and logistics services offered by Cosmos Group, this also includes a 50% stake in a terminal in the Port of Paita (Peru). DP World won a 30-year concession for the management and development of the greenfield multi-purpose port project at Banana, Democratic Republic of the Congo (DRC), which despite being Africa s third-most populous country, currently has no direct deep-sea port. The initial investment of $350 million will be spread over 24 months and construction is expected to start in DP World has signed a 20 year concession to build and operate a 1000-hectare modern logistics hub in Mali. The multimodal logistics platform will have inland container depots (ICD) and Container Freight Stations (CFS) that will facilitate the import and export of goods. Construction is expected to start in 2019 and is to take approximately 18 months to complete. DP World acquired 100% of Unifeeder Group, which operates the largest and most densely connected common user container feeder and an important and growing shortsea network in Europe. The acquisition will further enhance DP World s presence in the global supply chain and broaden our product offering to our customers - the shipping lines and cargo owners. The acquisition is subject to regulatory approvals and expected to close in 4Q

12 USD million Revenue Breakdown $3,000 $2, $2,000 $1,500 $1, Like-for-like at constant currency revenue growth of 3.0% $ $0 1H H H H H H 1H H 2018 LFL* Container 'Stevedoring' Container 'Other' Non-Container (excl. Lease Revenue) Lease Revenue (part of non-container) At 1H2018, non-containerized revenue accounted for approximately 37% of total revenue, up from 31% in 1H, on a reported basis. Like-for-like revenue increased by 3.0% driven by a 4.6% increase in total containerized revenue. Containerized stevedoring revenue per TEU increased by 0.5% on a like-for-like basis but total revenue per TEU dropped 1.5% due to a less favourable volume mix. Lease revenue is included in total non-container revenue for reporting purposes. Total non-container revenue increased by 38.8% on a reported basis and lease revenue accounted for 29% of total non-container revenue and 11% of total revenue on a reported basis. 12

13 Revenue Diversification 2014* * 2018* Containerized Non-containerized Containerized Non-containerized Containerized Non-containerized Extending the core business to play a wider role in the supply chain Container terminal operator to trade enabler 20% 30% 40% Connecting directly with cargo owners & aggregators of demand 80% 70% 60% Providing technology led solutions to remove inefficiencies Improve quality of earnings and drive returns *Approximate numbers 13

14 Throughput Overview Gross Volumes 000 TEU FY Volume 1Q 1Q Q 2Q Q18 Volume 1H 1H H18 Volume Asia Pacific & India Subcontinent +7.9% 31, % +5.3% +7.3% +3.6% 8, % +4.5% 16,244 Europe, Middle East and Africa* +11.5% 29, % +9.8% +12.7% +0.7% 7, % +5.0% 14,967 Americas & Australia +13.8% 8, % +6.1% +17.1% +4.4% 2, % +5.2% 4,408 Total Group +10.1% 70, % +7.3% +10.7% +2.5% 18, % +4.8% 35,620 Consolidated Volumes 000 TEU FY Volume 1Q 1Q Q 2Q Q18 Volume 1H 1H H18 Volume Asia Pacific & India Subcontinent % 10, % +1.2% +95.2% +0.7% 2, % +1.0% 5,048 Europe, Middle East and Africa* +7.6% 22, % +7.1% +9.2% -0.5% 5, % +3.1% 11,535 Americas & Australia +18.8% 3, % +19.6% +16.7% +16.9% 1, % +18.2% 1,994 Total Group +24.7% 36, % +6.6% +24.8% +1.5% 9, % +4.0% 18,576 *UAE Volumes included in Europe, Middle East and Africa +4.0% 15, % +2.9% +6.6% -2.3% 3, % +0.2% 7,738 14

15 Debt Position $ million 30 June June 31 Dec Total debt 8,976 7,547 7,739 Cash balance 1,512 1,631 1,484 Net debt 7,464 5,916 6,255 Net debt / annualized adjusted EBITDA 2.9 times 2.6 times 2.5 times Interest cover 5.8 times 7.4 times 7.5 times Well matched debt profile with long-term debt to meet long-term nature of our business. Highly cash generative business - Cash from operating activities amounted to $979 million in 1H2018. Leverage of 2.9 times (net debt to annualized adjusted EBITDA) within guidance range of below 4 times. 15

16 $ Millions Debt Maturity Profile Convertible bond Sukuk MTN Bank loans & Others Upcoming debt maturities include $650 million Sukuk in 2019, $500 million MTN in 2020 and $1.2 billion Sukuk in $1 billion convertible bond maturing in 2024 (puttable in 2021) and $1.75 billion MTN maturing in In 1H2018 we have drawn $680 million from our revolving credit facility to finance the acquisitions in India and Peru. Updating Global Medium Term Notes (GMTN) programme to maintain flexibility 16

17 Dubai Serves a Wide Region Midway between Asia & Europe Trade gateway for GCC, ISC & Africa with population access of over 2 billion Logistics hub for Arabian Gulf Host to the World Expo 2020 Pro-business government Rapidly growing trade and services sectors Cosmopolitan city with high standard of living Excellent healthcare & educational services Diverse living environment, over 200 nationalities Secure environment AED 1.3trn non-oil foreign trade () Largest domestic market in the region Jebel Ali Free Zone non-oil trade worth $83.1 bn () Jebel Ali Port is 9th largest port worldwide (Lloyds List/CI ) 19.5 million TEU capacity () 180+ shipping lines, 80+ weekly services, 140+ direct ports of call World's busiest international airport 88.2 million passengers in Handled 592 MMT air freight in 2016 DWC: Dubai s emerging cargo airport Rail network in GCC by 2020 Etihad Rail (UAE) will span 1,200 kms 75 Kms of Metro Tramway of 14 Kms #4 #21 #10 #10 Trading Across Borders (World Bank) - MENA region Globally in Ease of Doing Business Report 2018 (World Bank) and ranked #1 in Arab countries for 6 th consecutive year Global Connectedness Index 2016 (DHL) 2018 Economic Freedom Index Global ranking and Rank #1 in the Region 9 17

18 Jebel Ali Port & Free Zone (JAFZ) Integrated One Stop Shop for Business Solution 57 sq. km. modern commercial and industrial logistics park adjacent to Jebel Ali port and Al Maktoum international Airport 100% foreign ownership 0% corporate and personal taxes The freedom to repatriate both capital and profits No recruitment restrictions No currency restrictions Offering long term contracts Over 7,500 companies & more than 100 fortune 500 companies already in the Free Zone Best in class port operations brought together with Free Zone s intermodal, logistic facilities, customs and other services 18

19 Update on Free Zone Trading remains in line with expectations Over 290 new companies registered in 1H 2018 and total number of companies exceeds 7,600. Occupancy Rates % Occupancy rates of Jebel Ali Free Zone 100% Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Jun-18 95% 90% Land 77% 80% 83% 89% 90% 90% 90% 85% 80% Warehouse 90% 94% 95% 94% 84% 80% 79% 75% 70% 65% Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Jun-18 Office 87% 92% 95% 85% 66% 67% 61% On-Site Residential 84% 87% 100% 99% 95% 90% 89% Land Warehouse Office On-Site Residential Note: Warehouses include showrooms 19

20 Key Capacity Additions Year End Capacity New Developments and major expansions 2018 Year End Forecast 2020 Forecast Consolidated Capacity 49.7 m TEU Berbera (Somaliland) 0.15m TEU Maputo (Mozambique) 0.2m TEU Pusan (South Korea) 0.25m TEU Approx. 51m TEU Approx. 55m TEU Gross Capacity (Consolidated plus equity-accounted investees) 88.2 m TEU As above plus: Qingdao (China) 1.0m TEU Anterwp Gateway (Belgium) 0.3m TEU Approx. 90m TEU Approx. 100m TEU 2018 expected new consolidated capacity: Berbera (Somaliland) 0.15m TEU, Maputo (Mozambique) 0.2m TEU, and Pusan (South Korea) 0.2m TEU. Capital expenditure guidance for 2018 remains unchanged at up to $1.4 billion. 20

21 DP World Key Financial Metrics $ million Gross Throughput (TEU mn) Consolidated Throughput (TEU mn) Revenue 2,821 3,078 2,978 3,121 3,073 3,411 3,968 4,163 4,715 EBITDA 1,072 1,240 1,307 1,404 1,414 1,588 1,928 2,263 2,469 EBITDA margin 38.0% 40.3% 43.9% 45.0% 46.0% 46.6% 48.6% 54.4% 52.4% Leverage (Net Debt / EBITDA) PAT , ,362.5 EPS ROCE % 3.8% 4.4% 6.0% 6.8% 6.7% 7.1% 7.9% 9.5% 8.8% Interest cover x Capex 967 1, , ,389 1,298 1,090 Acquisition & Monetisation (1,504) (374) (637) 83 4, Consolidated Terminal Capacity (TEU mn) Gross Capacity (TEU mn) Gross Capacity Utilisation 72.7% 77.3% 78.8% 80.4% 77.8% 78.7% 77.5% 75.2% 79.5% 21

22 USD m Historical Operating Performance 5, Revenue 4, ,000 EBITDA 40 TEU m 2,000 1,000 PAT Volumes 22

23 ROCE* Return on Capital Employed 15% ROCE : 42% 0-15% ROCE : 35% 0% ROCE : 23% 90% Capital Employed 70% 50% 30% Medium Term Target of 15% 10% -10% DP World Terminals -30% -50% ROCE was at 8.8% in from 9.5% in % of our global capacity delivers returns in excess of 15%, the medium target ROCE. 25% of our capacity is less than five years old, newer capacity or investment in pre-operational capacity reduces Group ROCE. ROCE to continue to increase as portfolio matures * Includes all DP World consolidated and JV terminals 23

24 Acquisition of Dubai Maritime City & Drydocks World Acquisition of Dubai Maritime City (DMC) ($180 million) and Drydocks World ($225 million) for a total cash consideration of $405 million Maintaining Dubai as a premier Maritime hub is strategically important for DP World Leased to Drydocks World DMC offers 2.3 million sqm of prime land that can be developed for industrial and business parks. Alternative to the highly occupied Jebel Ali Free Zone Drydocks World is the largest shipyard in the Middle East with strong recurring revenue Acquisitions expected to be earnings accretive in first full year of consolidation 2.3mn Sqm to develop 26

25 Drydocks World The shipyard is the largest facility in the Middle East Three large dry docks that can accommodate Ultra Large Crude Carriers ( ULCCs ) and Ultra Large Container Vessel ( ULCVs ) 34 years of strong historical performance and currently maintains a market share of approx % of ship repair jobs in the region 27

26 Dubai Maritime City & Port Rashid Dubai Maritime City and Port Rashid Jebel Ali Port 26 28

27 Key Environmental Initiatives Dow Jones Sustainability Index (DSJI) Alignment with the UN Sustainable Development Goals (SDGs) Carbon Disclosure Project (CDP) In, DP World scored 61 points in the Dow Jones Sustainability (DSJI) Emerging Markets Index, the industry average is 47 and the industry best score is 86. DP World increased its percentile from the 61st to the 67th, so for the first time entering the top third of the ranking in the industry and only top 10% of the industry is included in the index. DP World is the only company in the region which is in the DSJI index. In, DP World joined the United Nations IMPACT 2030 initiative and became Regional Voice Lead for the UAE. Over the year, DP World invested up to $442 million in the natural deep-water Red Sea port at Berbera, supporting SDG Goal 8: decent work & economic growth. DP World continues to play an active part in the Transport Taskforce, which brings together 40 of the world s leading wildlife organizations and transport businesses to tackle illegal wildlife trade, supporting SDG Goal 15: Life on Land. In 2010, DP World was the first international marine and inland trade services provider to join the renowned CDP. In and for the third consecutive year, DP World s CDP report received the leadership score of A- which is within the 22% highest scoring companies responding to CDP. Over, DP World s focus on emissions reduction and continued efforts to cut its energy use reduced its CO2e intensity by 8% and energy intensity by 5% against a base year of DP World Solar Power Programme The DP World Solar Power Programme phases 1 and 2 include the installation of 154,000 solar panels on the roofs of DP World and JAFZA buildings, parking lots, warehouses and at Port Rashid. This will allow DP World to have the first green storage facilities, passenger terminal and warehouse in the UAE Phase 1 (22 MW peak capacity) is at an advanced stage of completion. Several facilities are already supplying power to the grid. Phase 2 (20-30 MW peak capacity) is in its final stage, with an intention to complete in Responsible Waste Management In, DP World participated in Go Green for the fourth year running, an annual event led by the world s leading container port operators. Almost 3,000 employees committed 4,500 hours to environmental activities, collecting some 10,000 kilograms of waste, and planting over 4,000 trees. 27

28 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 DP World Peer Group Comparison 600 Spread over Mid-Swaps DPW 2037 DPW 2020 DPW DPW 2023 JAFZ 2019 TAQA 2024 DEWA2020 TAQA 2036 Issuer MOODY FITCH S&P DP World Baa1 BBB+ - JAFZ Baa1 BBB+ - TAQA A3 A A- DEWA Baa1 - BBB Source: Bloomberg as of 15/08/2018 On 24 th July 2018, Fitch has affirmed DP World at BBB+ with stable outlook following last year s upgrade from BBB (27 th July ). On 7 th August 2018, Moody s upgraded DP World to Baa1 from Baa2 with stable outlook following previous upgrade from Baa2 from Baa3 (1 st September 2016). 28

29 Thank you INVESTOR RELATIONS CONTACTS Redwan Ahmed, Director Investor Relations Lie-Tin Wu, Investor Relations Manager Investor Relations