Ports operator cuts losses with sale but faces new challenges this year
Accounts filed with the corporate regulator show DP World Australia made a loss of $32 million for the year to the end of December, compared with a $74 million loss in 2011. Revenue from the Australian operations, which includes container terminals in Melbourne, Sydney, Brisbane and Fremantle, rose by 15 per cent to $592 million.
The latest result included a net gain of almost $47 million from the sale in July of a 60 per cent stake in Adelaide's container port operation to Flinders Ports. Without the sale, the Australian operations would have posted a larger loss in 2012 than the year before.
DP World Australia and rival Patrick, which is a division of listed transport company Asciano, have faced difficult trading conditions. The two stevedores will also be stripped of their duopoly on Australia's waterfront this year when Hutchison Ports finally begins operations in Brisbane and Sydney.
Hutchison is also expected to be among the leading candidates to win the right to operate a new container terminal at Melbourne's Webb Dock. A short-list will be named within the next two months.
In a bid to bolster its defences, DP World is spending $250 million on its Brisbane container terminal, which includes 14 new straddle carriers used to shift containers.
DP World would not respond to questions about the financial health of the Australian business. DP World Australia's board includes Citi Infrastructure's co-head, Felicity Gates.
Citi Infrastructure and a Canadian pension fund bought 75 per cent of DP World's Australian ports business in late 2010 for $1.5 billion. The sale helped pay down the large debt of DP World's parent, Dubai World, following the collapse of the Middle Eastern city's property market in 2007.
DP World's management has remained to oversee the Australian container terminals and its 2000-strong workforce.
Patrick is also replicating its automated terminal in Brisbane at its Port Botany site in Sydney. The decision to replace manned jobs with machines will save Patrick an estimated $50 million a year.
Frequently Asked Questions about this Article…
DP World Australia reported a loss of $32 million for the year to the end of December 2012, an improvement from a $74 million loss in 2011. Revenue from its Australian operations rose 15% to $592 million.
The 2012 result included a net one‑off gain of almost $47 million from selling a 60% stake in the Adelaide container terminal to Flinders Ports in July. Without that sale, the Australian operations would have posted a larger loss in 2012 than in 2011.
In late 2010, Citi Infrastructure and a Canadian pension fund bought 75% of DP World’s Australian ports business for $1.5 billion. The sale helped pay down the large debt of DP World’s parent, Dubai World, after the 2007 property market problems — a point investors may consider when assessing ownership and capital structure.
DP World Australia and rival Patrick (a division of listed transport company Asciano) have faced tough trading conditions and will lose their effective duopoly when Hutchison Ports begins operations in Brisbane and Sydney this year. Hutchison is also expected to be a leading candidate for the new container terminal at Melbourne’s Webb Dock.
DP World is investing $250 million in its Brisbane container terminal, including the purchase of 14 new straddle carriers used to move containers — a defensive investment aimed at improving capacity and efficiency.
Patrick is replicating its automated terminal from Brisbane at its Port Botany site in Sydney. The move to replace manned jobs with machines is estimated to save Patrick about $50 million a year, which could materially improve margins and cash flow.
DP World declined to respond to questions about the financial health of the Australian business. The company’s Australian board includes Felicity Gates, co‑head of Citi Infrastructure.
DP World’s Australian operations include container terminals in Melbourne, Sydney (Port Botany), Brisbane, Fremantle and the Adelaide terminal that was partly sold to Flinders Ports.
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