Moody's publishes updated analysis report on DP World

"Over the past 12 months, DP World has continued to execute an ambitious growth programme, including capacity expansion at its home port in Jebel Ali, as well as new facilities in Spain, Senegal, and Egypt, which was largely factored into its ratings,"

says Philipp Lotter, lead analyst for DP World and Senior Vice President at Moody's Middle East Limited in Dubai (DIFC).

"Ratings remain supported by the strategic importance to Dubai, as well as established and diversified international activities, although leverage is likely to further rise within certain financial boundaries".

Moody's report highlights that DP World's well-diversified, global operations and strong market position -- both domestically through its state-of-the-art Jebel Ali port and globally through its facilities in 5 continents -- support ratings. The company's ratings also benefit from its good customer relationships, as well as its well-balanced portfolio that predominantly consists of origin & destination (O&D) traffic rather than more cyclical transhipment traffic.

The operational and financial performance of its domestic operations represents the backbone of the group's fundamental creditworthiness, given the high margins and throughput that are achieved there. Moody's also factors high government support assumptions into DP World's ratings, initially from the government of Dubai, and subsequently from the federal level, which provides further credit enhancement to DP World's fundamental creditworthiness in the Baa range.

The report also highlights the major factors that currently constrain the company's ratings, particularly the general risks inherent with the
industry and, more importantly, the expectation of rising leverage and a more aggressive financial profile as the company executes its expansion programme. In particular, the container ports market is strongly correlated with global economic activity, which is widely expected to decline over the short term. At the same time, the significant container port under-capacities that currently exist globally provide some cushion for a weaker economic climate.

"Last year's IPO saw around 20% of DP World's shares listed on the Dubai International Financial Exchange (DIFX)", says Lotter. "Ratings do not assume any further reductions in the government's stake in DP World over the medium term", Lotter adds.

DP World ranks amongst the world's four largest container terminal operators by capacity and throughput and is one of the most geographically diversified companies, operating a current total of 45 terminals in 25 countries, including the massive Jebel Ali container port in its home market of Dubai (United Arab Emirates), as well as facilities in India, Australia, China, the UK and Argentina, to name a few.

DP World is 80% indirectly owned by the government of Dubai through Dubai World, a holding company for a portfolio of businesses and projects for the Dubai government. The remaining 20% stake is listed on the Dubai International Financial Exchange (DIFX) following an IPO in November 2007.