DP World reviews expansion plans

http://www.lloydslist.com/ll/news/viewArticle.htm?articleId=20017611648

CONTAINER terminal giant DP World is reviewing its expansion strategy, cutting costs and freezing recruitment in response to the global downturn in box volumes.

The Dubai-based operator, with ongoing box terminal construction projects at London Gateway and Rotterdam’s Maasvlakte 2, expects the “increasingly challenging macroeconomic environment” in the second half of last year to “remain for the foreseeable future”.

Chief financial officer Yuvraj Narayan told Reuters that DP World did not believe there would be pronounced job cuts, but it was in no hurry to expand through acquisitions until the market stabilises.

He said that the results of the expansion review would be completed in a month and that the company would announce its results and outlook in March. “The management has initiated broad measures to cut normal costs like travel. There is a general freeze on recruitment and a close review of replacements as far as headcounts are concerned.”

DP World’s senior vice-president and managing director for Europe & Russia, Flemming Dalgaard, confirmed that London Gateway was included in the review of capital expenditure, along with all the other developments in Europe, but added that no decisions had as yet been taken.

Drewry consultants ports director Neil Davidson said: “DP World is currently faced with the same challenges that all other port operators and developers are faced with — that is, the need to deal with this unprecedented slowdown in growth in the short term. “

This may well mean delaying or slowing down capacity expansion projects. For DP World this will almost certainly include reviewing the timing of projects such as London Gateway and Rotterdam Maasvlakte II. However, the long term rationale for such projects remains very sound in my view.”

Only last week, HSBC Bank forecast a 3% shrinkage for global container volumes in 2009, against an historic average annual increase of 10% for the past 30 years.