Fortunately, the Dubai-based port operator will finish the year in a strong financial position.
When Dubai World made its surprise request to creditors last week asking to delay debt repayments for six months, global port operator DP World swiftly released a terse statement.
“The Government of Dubai has confirmed that DP World and its debt are not included in the restructuring process for Dubai World,” was all it said.
DP World is 77 percent owned Dubai World and is the jewel in its crown, and the world's fourth-largest ports operator will almost certainly be protected from any fallout. The company made US$188 million in the first half and reported a stronger third quarter as container volumes increased. The nine-month volumes are eight percent lower than in January –September last year.
But as financial markets around the world are buffeted by the news it is probably too early to tell what impact all this will have on DP World.
Neil Davidson from Drewry Shipping Consultants said DP World was profitable despite the recession, a good position to be in as cash strapped corporate bosses look to dispose of underperforming units.
Davidson said it all depends on how much of DP World’s borrowing is linked to Dubai World and how much borrowing has been made independently.
The port operator is on an ambitious expansion drive and will have sought financing for a significant proportion of its infrastructure construction costs. There are sizeable development projects in key growth markets of India, China and the Middle East, so much so that the company expects capacity to rise to around 95 million TEU over the next 10 years.