DP World Limited Investor Presentation June 2018

Transcription

1 DP World Limited Investor Presentation June 2018

2 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) : 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) 2

3 F 2019F 2020F 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 March 2018 Report. 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 2017 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. 1. Drewry Maritime Research 2017 Annual Report 4

5 Our Global Footprints 5

6 Overview of 2017 Financial Results Results before separately disclosed items (1) unless otherwise stated USD million As reported % change % change Like-for-like at constant currency (2) Gross throughput (3) (TEU 000) 70,079 63, % 9.7% Consolidated throughput (4) (TEU 000) 36,476 29, % 6.2% Revenue 4,715 4, % 6.0% Share of profit from equity-accounted investees (17.3%) 31.2% Adjusted EBITDA (5) 2,469 2, % 8.0% Adjusted EBITDA margin (6) 52.4% 54.4% % (7) Profit for the period 1,363 1, % 12.0% Profit for the period attributable to owners of the Company 1,209 1, % 15.1% Profit for the period attributable to owners of the Company after separately disclosed items 1,177 1, % - Basic earnings per share attributable to owners of the Company (US cents) % 15.1% Ordinary dividend per share (US cents) % - 1 Before separately disclosed items (BSDI) primarily excludes non-recurring items. DP World reported separately disclosed items of a loss of $31.8 million. 2 Like-for-like at constant currency is without the addition of new units at Berbera (Somaliland), Limassol (Cyprus), Saint John (Canada), CXP (Peru), Yarimca (Turkey), Kigali (Rwanda), Posorja (Ecuador) and normalizes for consolidations of PNC (South Korea) and 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 but 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. In 2016, like-for-like adjusted EBITDA margin was at 52.2%. 6

7 Strong Performance in 2017 Continued revenue and EBITDA growth Strong balance sheet and cash generation Reported revenue growth of 13.2% supported by the strong volume growth across all three DP World regions. Like-for-like revenue increased by 6.0% driven by a 6.9% increase in containerized revenue. Adjusted EBITDA grew 9.1% and EBITDA margin for the full year at 52.4%. Like-for-like adjusted EBITDA margin was higher at 53.2%. Cash from operating activities amounted to $2,412 million up from $2,002 million in Free cash flow (post cash tax maintenance capital expenditure and pre-dividends) amounted to $2,095 million against $1,674 million in Leverage (Net Debt to adjusted EBITDA) decreased to 2.5 times from 2.8 times in Second Fitch upgrade from BBB to BBB+ with stable outlook. Continued investment in high quality longterm assets Capital expenditure of $1,090 million invested across the portfolio in Key capacity expansions include Jebel Ali Port (UAE), London Gateway (UK), and Prince Rupert (Canada) taking global gross capacity to 88 million TEU in We expect capital expenditure in 2018 to be up to $1.4 billion with investment planned mainly into Jebel Ali (UAE), Posorja (Ecuador), Berbera (Somaliland), Pusan (South Korea), Maputo (Mozambique) and Sokhna (Egypt). Acquired Drydocks World (Drydocks) and Dubai Maritime City (DMC) in Dubai (UAE) to enhance our position as leading maritime service provider and strengthen the Group s port related businesses. Strong earnings growth, investment partnership and consolidation Strong adjusted EBITDA growth resulted in a 7.3% increase in attributable profit on a reported basis and 15.1% growth on a like-for-like basis. Ordinary dividend increased by 7.9% to 41 US cents to reflect earnings growth in Investment partnership with NIIF to invest up to $3 billion in ports, transportation and logistics sector in India. Acquired an additional 66.67% stake in Embraport in Santos (Brazil) to take shareholding to 100%. 7

8 US$ Million Revenue Breakdown $5, $4,000 $3,000 $2,000 $1, Revenue growth as reported is 13.2% Like-for-like revenue growth of 6.0% Lease Revenue includes income from Jebel Ali Free Zone $ LFL* Container 'Stevedoring' Container 'Other' Non-Container (excl. Lease Revenue) Lease Revenue & related services Revenue growth of 13.2% benefitting from strong volume growth across all three DP World regions. Like-for-like revenue increased by 6.0% driven by a 6.9% increase in total containerized revenue as a result of the volume growth. Like-for-like containerized revenue per TEU (twenty-foot equivalent unit) grew by 0.7% and total revenue per TEU remained broadly flat (-0.2%). Lease Revenue is included in total non-container revenue for reporting purposes. Total non-container revenue increased by 7.2% on a reported basis and 3.9% on a like-for-like basis. Lease Revenue accounted for 42% of total non-container revenue and grew 5.8% on a reported basis as we continue to diversify our revenue stream and add complementary sectors. * Like-for-like at constant currency 8

9 Revenue Diversification 2014* 2017* 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 9

10 Throughput Overview Gross Volumes 000 TEU 1H H H H 2017 FY 2016 FY 2017 Volume Q Q 2018 Volume 1Q18 Asia Pacific & India Subcontinent +2.9% +6.5% +6.3% +9.2% +4.6% +7.9% 31, % +5.3% 8,034 Europe, Middle East and Africa* +0.6% +9.0% +2.1% +13.9% +1.4% +11.5% 29, % +9.8% 7,396 Americas & Australia +8.3% +12.0% +0.4% +15.4% +4.1% +13.8% 8, % +6.1% 2,161 Total Group +2.5% +8.2% +3.8% +11.9% +3.2% +10.1% 70, % +7.3% 17,591 Consolidated Volumes 000 TEU 1H H H H 2017 FY 2016 FY 2017 Volume Q Q 2018 Volume 1Q18 Asia Pacific & India Subcontinent +6.6% +97.5% -2.8% % +1.8% % 10, % +1.2% 2,543 Europe, Middle East and Africa* -1.6% +5.4% -1.0% +9.7% -1.3% +7.6% 22, % +7.1% 5,708 Americas & Australia +19.4% +15.2% +5.6% +22.2% +11.9% +18.8% 3, % +19.6% 976 Total Group +1.6% +22.4% -0.6% +27.1% +0.4% +24.7% 36, % +6.6% 9,226 *UAE Volumes included in Europe, Middle East and Africa -6.0% +4.3% -4.5% +3.8% -5.3% +4.0% 15, % +2.9% 3,826 10

11 Debt Position $ million 31 Dec Dec 2016 Total debt 7,739 7,618 Cash balance 1,484 1,299 Net debt 6,255 6,319 Net debt/adjusted EBITDA 2.5x 2.8x Interest cover 7.5x 6.7x Well matched debt profile with long-term debt to meet long-term nature of our business. Highly cash generative business - generating cash from operations of $2,412 million and a cash balance of $1,484 million. Leverage of 2.5 times (net debt to adjusted EBITDA) below the guidance range of 4 times. 11

12 $ Millions Debt Maturity Profile Convertible bond Sukuk MTN Bank loans & Others Well matched debt profile with long-term borrowings to match the long-term nature of our business with average port concessions of 36 years. Upcoming debt maturities include the $650 million JAFZA Sukuk in 2019, the $500 million MTN in 2020 and the $1.2 billion Sukuk in Furthermore, the $1 billion convertible bond maturing in 2024 (puttable in 2018 and 2021) and $1.75 billion conventional bond maturing in

13 Maintaining Differentiation from Peers Operator 2016 Throughput 2016 Market Share 2016 Equity TEU * Market Share Capacity China Cosco Shipping (1) % 4.2% Hutchinson Port % 6.5% Holdings (2) Key Focus Mainly focused on China although expanding internationally Primarily gateway, limited exposure to transhipment Limited expansion plans, focus on development of capacity Significant exposure to transhipment in Hong Kong High volumes in China, limited in North America & Africa Exposed to slow growth in Hong Kong cargo Low number of active greenfield developments APM Terminals % 5.3% 98.2 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% 99.3 DP World % 5.7% (3) 84.4 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 Primarily origin and destination cargo (70%) with pricing power Emerging market focus and strong presence in Europe High global presence, limited in North America Significant developments in Jebel Ali & London Gateway Expansion in emerging and mature markets Source: Drewry Maritime Research 2017 Annual Report. *Equity TEU adjusts figures to match the % ownership of terminals. (1) China Cosco Shipping includes Cosco Shipping Ports, China Shipping and Cosco Container Line for the period Apr-Dec 2016 after the merger in Feb (2) Hutchison figure include HPH Trust volumes (3) DP World equity league ranking: #4 in 2014 and #3 in 2015 and

14 Containerisation Penetration Rates Remain Low Region / country 2016 port throughput (mn TEU) Estimated population in 2016 (mn People) Container / thousand capita in 2016 (TEU / 000 people) China 218 1, UK North America Europe 121 1, WORLD 699 7, Latin America Brazil Russia Africa 24 1, India 13 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 2017 Annual Report 14

15 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 (2017) Largest domestic market in the region Jebel Ali Free Zone non-oil trade worth $83.1 bn (2017) Jebel Ali Port is 9th largest port worldwide (Lloyds List/CI 2017) 19.5 million TEU capacity (2017) 180+ shipping lines, 80+ weekly services, 140+ direct ports of call World's busiest international airport 88.2 million passengers in 2017 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 2017 (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 15

16 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 16

17 Update on Free Zone Trading remains in line with expectations Over 500 new companies registered in 2017 and total number of companies exceeds 7, % 95% 90% 85% 80% 75% 70% 65% Occupancy Rates % Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Land Warehouse Office On-Site Residential Occupancy rates of Jebel Ali Free Zone Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Land 77% 80% 83% 89% 90% 90% Warehouse 90% 94% 95% 94% 84% 80% Office 87% 92% 95% 85% 66% 67% On-Site Residential Note: Warehouses include showrooms 84% 87% 100% 99% 95% 90% 17

18 Key Capacity Additions 2017 Year End Capacity New Developments and major expansions in Year End Forecast 2020 Forecast Consolidated Capacity 49.7 m TEU Jebel Ali (UAE) T3 1.5m TEU London Gateway (UK) 0.8m TEU Prince Rupert (Canada) 0.5m TEU Berbera (Somaliland) 0.15m TEU Pusan (South Korea) consolidation 5.25m TEU Approx. 51m TEU Approx. 55m TEU Gross Capacity (Consolidated plus equity-accounted investees) 88.2 m TEU As above plus: Qingdao (China) 0.5m TEU Rotterdam (Netherlands) 0.7m TEU Approx. 90m TEU Approx. 100m TEU Many of our existing portfolio of terminals have the ability to increase capacity as utilization rates and customer demand increases consolidated capacity additions include Jebel Ali (UAE) T3 1.5m TEU, London Gateway (UK) 0.8m TEU, Prince Rupert (Canada) 0.5m TEU, Berbera (Somaliland) 0.15m TEU and Pusan (South Korea) consolidation 5.25m TEU expected new capacity additions: UAE, Pusan (South Korea), and Maputo (Mozambique). 18

19 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% 19

20 2017 Return on Capital Employed Capital Employed 15%: 42% 0-15%: 35% <0%: 23% 90.0% 70.0% 50.0% 30.0% 15% * 10.0% -10.0% -30.0% -50.0% ROCE was at 8.8% in 2017 from 9.5% in Approximately 35% of our global capacity delivers returns in excess of 15%. Newer capacity or investment in pre-operational capacity reduces Group ROCE. Includes all DP World consolidated terminals and our equity-accounted investees. * Medium term target 20

21 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 21

22 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 22

23 Dubai Maritime City & Port Rashid Dubai Maritime City and Port Rashid Jebel Ali Port 23 23

24 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 DP World Peer Group Comparison 600 Spread over Mid-Swaps DPW 2037 DPW 2020 DPW 2017 DPW 2023 JAFZ 2019 TAQA 2024 DEWA2020 TAQA 2036 Issuer MOODY FITCH S&P DP World Baa2 BBB+ - JAFZ Baa2 BBB+ - TAQA A3 A A- DEWA Baa1 - BBB Source: Bloomberg as of 31/05/2018 On 27 th July 2017, Fitch upgraded DP World to BBB+ from BBB with stable outlook following last year s upgrade to BBB from BBB- (5 th August 2016). On 1 st September 2016, Moody s upgraded DP World to Baa2 from Baa3 with stable outlook. 24

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