UAE. Dubai-based port operator DP World said on Wednesday there was no end in sight to a fall-off in activity caused by the global downturn, after reporting an 8% drop in trade volumes in the first two months of 2009.

The company, one of the world's largest container operators, reported a 48 percent rise in headline 2008 results as profit after tax for continuing operations rose to $621 million, but only after a sharp contraction in the last quarter of the year.

"This volume decline has continued into 2009 and in the first two months of the year we have seen an average decline of 8% in consolidated volume across the group," the company said in a statement.

Shares in the company, a bellwether for global economic activity, dipped as much as 4.5% on the news on the uncertain outlook. DP World operates 48 marine terminals and 13 new port developments in 31 countries worldwide.

The World Trade Organization expects global grade volumes to fall 9% in 2009 in the biggest contraction since World War Two as demand collapses in the most serious economic downturn in decades.

"The volume deceleration we saw in the last quarter of 2008 has continued into early 2009 and shows little sign of easing in the foreseeable future," DP World said.

The company said it would delay plans to expand capacity until it saw demand rise and that it would consider new options to address the fall in its share price, which hit a low of US$0.17 on 5 March after a high of US$1.25 on 4 January 2008.

"Over the next few months the board will evaluate all available options to address its continued disappointment with the market's valuation of the company," DP World said.

Nabil Ahmed, analyst at Deutsche Bank, said the results met expectations and upgraded his rating to "buy" while cutting the share price target to US$0.30, saying the share price slide, down 46% so far this year while peers are up 4%, made the stock a bargain.

"Management is now seriously addressing the falling volumes issue by drastically cutting new capacities and costs," Ahmed said in a note to clients.

"Key risks include further deterioration in global trade, high exposure to Dubai's weakening economy, which accounts for circa 50% of profits, and capacity utilisation rate, which is a key factor influencing margins," Ahmed said.

Analysts at Citibank said they expected the company to consider selling shares to strategic investors, changing its current listing - the company is now listed on Nasdaq Dubai - or even taking the company private.

"None look simple and not all might be feasible or desirable to the majority shareholder," Citi analysts said in a note. "Fundamental value is far higher than the current share price unless volumes collapse and recovery is 'L'-shaped."

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

• Top news
• Business News
• Company News