Dubai-based DP World on Thursday reported a 59% drop in first-half profit as the ports and logistics company struggles with shipping disruptions in the Red Sea and rising tensions in the Middle East due to the ongoing war between Israel and Hamas in the Gaza Strip.
Since October, missile and drone attacks in the Red Sea by Yemeni Houthi militias – who say they are acting in solidarity with the Palestinians in the Gaza war – have forced many maritime freight companies to divert their ships away from the Suez Canal and around the Cape of Good Hope at the southern tip of Africa.
According to analysts, ports in the Middle East, such as the Gulf, have lost traffic as ships bypass Africa.
Total profit attributable to DP World’s owners was $265 million in the six months to June 30, down from $651 million a year earlier, the company said, adding that its operations had been “partially impacted” by disruptions in the Red Sea.
Revenue increased 3.3% to $9.34 billion, driven by the company’s logistics and port and terminal businesses, with consolidated container volumes increasing 3.7% on a comparable basis.
DP World, which manages ports from the UK to Peru, also operates warehousing and logistics parks. Revenue in the company’s logistics business fell 2 percent, while revenue in its maritime services business fell 4.1 percent in the first half of the year.
In the Middle East, Africa and Europe, DP World reported a 1.9 percent like-for-like decline in container volumes, while profit in the region fell 7 percent. The state-owned conglomerate said volumes rose at its flagship Jebel Ali port in Dubai, but did not disclose volumes for other Middle East ports such as Jeddah.
The company’s adjusted core profit fell by 4.3 percent to around $2.5 billion in the first six months of the year due to the crisis and investments to expand its logistics platform. However, DP World expects earnings to improve in the second half of the year.
(Reuters – Reporting by Federico Maccioni and Alexander Cornwell; Editing by Shounak Dasgupta)
