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Dubai port operator confident in Europe, UK growth

Sultan Ahmed Bin Sulayem, chairman of DP World
Chris Ratcliffe | Bloomberg | Getty Images
Sultan Ahmed Bin Sulayem, chairman of DP World

The head of the world's third-largest port operator DP World firmly believes in a rebound in European economic growth, and insisted the United States was not "attractive" enough for returns in the near-future.

"We see hope in Europe and that's important for us," Ahmed Bin Sulayem, chairman of DP World, told CNBC's "Access: Middle East" in an interview.

On March 20, DP World reported $604 million in net profit for 2013, an increase of 10.9 percent that beat analyst expectations. Consolidated container volumes for the year, one of two metrics published showed a drop of 0.5 percent on a like-for-like basis.

The company remains upbeat about the prospects of its $2.4 billion London Gateway deep-water port, which opened last year.

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"What we do in London is not different to what we do in the last 30 years in Jebel Ali (a port town close to the city of Dubai)," he added. "Definitely the economy is improving and getting better".

An interesting gap in its DP World's portfolio of developed markets has been the U.S. In 2006, DP World became entangled in a high-profile dispute after acquiring a series of ports in the U.S. for $6.8 billion. Shortly afterwards, it decided to offload the assets under pressure from U.S. politicians, who argued that foreign ownership of strategic infrastructure jeopardized national security.

"I don't think there is a problem for us coming to the U.S. again, we have been approached, we have actually looked at a few terminals," said Bin Sulayem. "The problem is economic. We cannot find it attractive in port operations to build a green field in the U.S."

It's a different story back on its home turf in Jebel Ali, where capacity is expected to grow to 19 million 20-foot equivalent units (TEU) by the end of the year. According to the World Shipping Council, the port is the ninth busiest globally, but still far behind leaders Shanghai and Singapore.

Earlier this year, the World Bank forecast global trade would pick up from 3.1 percent in 2013 to 4.6 percent in 2014. DP World hopes the expansion can help it recreate a "normalized rate of growth" for its container volumes.

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DP World, which operates more than 65 marine terminals across six continents, and employs some 30,000 people, is also looking at opportunities in Africa. The firm cashed in on $659 million last year from assets sold in Hong Kong, Australia and Russia, among others, and deployed over a billion dollars in capital expenditures across its portfolio.

"DPW's decision to keep on investing through the downturn in Jebel Ali, London Gateway, Rotterdam, Lima and Santos have left them well-placed to benefit from the upturn now being seen," Mark McVicar, transport and logistics analyst at Nomura, told CNBC. "We regard DPW as the most focused and highest growth of the global port operators".

DP World is majority-owned by the government of Dubai, with the remainder trading on NASDAQ Dubai. Its shares have underperformed the benchmark index in the first quarter, gaining just over one percent.

This week on "Access: Middle East": An exclusive conversation with Ahmed Bin Sulayem, chairman of DP World. Catch the show to get his views on China, rising competition from neighboring Abu Dhabi and the crisis that hit Dubai in 2009.


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