Middle East Tensions Leave Big Dent in DP World's First-half Profits
Dubai-owned DP World reported a 59% drop in first-half profit on Thursday as the ports and logistics company grappled with shipping disruptions in the Red Sea as tensions flare in the Middle East due to the ongoing Israel-Hamas war in Gaza.
Missile and drone attacks in the Red Sea since October by Yemen's Houthi militants, who say they are acting in solidarity with Palestinians in the Gaza war, have forced many ocean freight firms to re-route vessels away from the Suez Canal to around the Cape of Good Hope on the southern tip of Africa.
Analysts say Middle East ports like those in the Gulf have lost out on trans-shipment traffic as ships sail around Africa.
Overall 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 Red Sea disruptions.
Revenue rose 3.3% to $9.34 billion, driven by the company's logistics as well as ports and terminals divisions, with consolidated container volumes up 3.7% on a like-for-like basis.
DP World, which manages ports from Britain to Peru, also operates warehousing and logistics parks. Revenue from the company's logistics business fell 2%, while marine services saw a half-year revenue decline of 4.1%.
In the Middle East, Africa and Europe, DP World recorded a 1.9% like-for-like decline in container volumes, while profit from the region fell 7%. The state-owned conglomerate said volumes rose at the flagship Jebel Ali port in Dubai, but it did not disclose volumes for other Middle East ports such as Jeddah.
The company's overall adjusted core profit fell by 4.3% to about $2.5 billion for the six months due to the crisis and investments to expand its logistics platform, but DP World said it expects an improved performance for the second half of the year.
(Reuters - Reporting by Federico Maccioni and Alexander Cornwell; Editing by Shounak Dasgupta)