MEED 100 Sector analysis: Transport & Logistics

31 March 2010

DP World weathers Dubai debt storm and decline in global trade as Nakilat continues good showing

Dubai-based ports operator DP World has endured the turbulent 12 months that was anticipated in last year’s MEED 100. 

The company has been hit hard by the decline in global trade caused by the economic crisis. Plans for a third terminal at Jebel Ali remain on hold indefinitely until there are tangible signs of a full global recovery. In the meantime, there is plenty of spare capacity at the existing site.

Transport and logistics
Rank 2010Rank 2009CompanyExchangeMarket Cap ($m)Share price ($)
2744DP World Dubai (DIFX)6,3580.38
5860Qatar Gas Transport Company (Nakilat) Doha3,3585.99
8766Agility Logistics Kuwait2,1702.15
Source: Thomson Reuters

The company did seize new business last year, winning contracts to run the Algerian port of Algiers and Djen Djen, and opened its new facility in Djibouti.

But since late November, the company has been mired by association with its debt-laden parent Dubai World. The government has made clear that the ports group is exempt from the Dubai World restructuring, but questions persist over whether the state will sell off part of its stake in the business to cover the holding company’s $22bn obligations.

DP World’s credit rating was downgraded in December along with several other government-related entities, as agencies anticipated further contagion from the Dubai World crisis.

Despite these difficulties however, there is no doubt that DP World remains a strong business. In January this year, the company announced it will seek a listing on the London Stock Exchange during the second quarter of this year in a bid to attract the international investors who have baulked at the underperforming Nasdaq Dubai index.

In spite of the distractions, DP World’s market capitalisation has more than doubled to $6.4bn and the company has regained much of the ground it lost in last year’s ranking, climbing from 44 to 27.

While DP World has retrenched, Qatar Shipping Company (Nakilat) has continued to expand through the downturn, building on Doha’s investment in developing its liquefied natural gas (LNG) industry. This growth has seen the company continue to rise, reaching 58 in the MEED 100.

Nakilat is a key component in Doha’s strategy to take control of the LNG supply chain, hence the billions poured into the company’s fleet in the last two years. The company continued to take delivery of new vessels last year, part of an $11bn investment in state-of-the-art LNG carriers. By the middle of this year, the company will own or part-own 54 carriers. A $1bn loan facility to part-fund the arrivals of new carriers was heavily oversubscribed.

In March last year, the group agreed a joint venture with the Netherlands’ Damen Shipyards Group for the management of a shipyard at Ras Laffan, which is due to open in the first quarter of this year. As Nakilat expands to accommodate Qatar’s enhanced LNG capacity, it would be a surprise if the group does not rise further in next year’s classification.

Kuwait’s Agility Logistics, meanwhile, has continued to slide down the rankings, falling 21 places. The company is embroiled in a law suit with the US government involving alleged overcharging for its services. Agility’s logistics support to the US government in Kuwait and Iraq is a major source of its revenue. The company denies fraud, but has seen its share price suffer, sliding from KD1.2 ($4.2) in November 2009 to KD0.52 in early January this year.

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