Dubai-based port operator DP World has reported a significant drop in its half-year profits, driven by disruptions in the Red Sea caused by the ongoing conflict between Yemen's Houthi rebels and Israel.
This downturn is expected to lead the company to scale back its investments in the East African region.
DP World's profits fell sharply to $265 million this year, a nearly 60 percent decrease from the $651 million recorded during the same period last year.
The company's chairman and CEO, Sultan Ahmed bin Sulayem, attributed the drop to the deteriorating geopolitical situation and supply chain disruptions in the Red Sea.
"The year 2024 has been marked by a deteriorating geopolitical environment and disruptions to global supply chains due to the Red Sea crisis," the company said in a statement.
"While the near-term trading outlook remains uncertain due to macroeconomic and geopolitical headwinds, the resilient financial performance of the first half positions us well to deliver stable full year adjusted profits."
DP World has been heavily invested in the East African region, notably at the Port of Berbera in Somaliland.
The company also had its sights set on the Port of Mombasa in Kenya, as the country explores privatisation initiatives for multiple berths at the Mombasa and Lamu ports.
Last year, the Kenya Ports Authority (KPA) invited potential stakeholders to express interest in leasing port infrastructure through public-private partnerships.
The ongoing conflict has seen Houthi rebels, since November, targeting shipping through the Red Sea corridor, a critical waterway for global trade.
The attacks have disrupted the flow of an estimated $1 trillion worth of goods annually and have led to some of the most intense combat operations involving the US Navy since World War II.
However, the financial strain from the Red Sea disruptions may force DP World to reconsider or delay its expansion plans in East Africa.
This development could have broader implications for regional trade and economic growth, as DP World's investments have been seen as a key driver of infrastructure development and modernisation in the area.
