14 March 2024 (Lloyd's List) - DP World is taking the Red Sea crisis in its stride, saying the fallout at two of its affected container terminals is manageable given the group’s overall scale and resilience.
The facilities operated by the Dubai-headquartered port giant in Egypt’s Sokhna and Saudi Arabia’s Jeddah have borne the brunt of the effect from the Yemeni Houthis’ persistent attacks on merchant shipping in the region, said senior vice-president Redwan Ahmed.
Container volumes there in the first two months of this year have witnessed “double-digit” decline, Ahmed told a conference call with investors on Thursday.
Lloyd’s List previously reported Jeddah, Saudi’s largest container port, has seen a stark fall in vessel calls since December, when Houthi attacks caused mass rerouting around Africa and decimated Red Sea transhipment traffic.
However, Sokhna and Jeddah only account for less than 5% of DP World’s total earnings before interest, taxes, depreciation and amortisation, according to the group’s financial controller Srinath Rajanna.
Their combined capacity of 3.5m teu makes up an even smaller share, less than 4%, Ahmed said, adding that feeder services have stabilised traffic into the two ports.
Meanwhile, other DP World ports, such as Jebel Ali in the UAE, have benefited from the rerouting and managed to cushion the blow.
“Overall, the portfolio has delivered a resilient performance and we are not too concerned about what is going on [in the Red Sea],” Ahmed said.
This year, the company plans to add more than 7m teu in container handling capacity, bringing its total to more than 102m teu.
“Many of our existing portfolio of terminals have the ability to increase capacity as utilisation rates and customer demand increase,” it said.
The statement comes as DP World announced a 4.4% like-for-like increase in gross throughput to 81.5m teu for 2023.
While total revenue grew 6.6% year-on-year to $18.3bn, profit dropped 17.7% to $1.5bn.
The revenue growth was mainly driven by its offshore and shipping service unit Drydocks World, as well as the full-year consolidation benefit of Imperial Logistics, which DP World acquired in the second half of 2022 for $890m.
Last year, the company invested $638m in its logistics division to expand operations in India, Africa, the UAE and Europe, as the port operator shifts focus towards high margin cargo and integrated supply chain solutions for sustainable returns.
“Overall, we delivered a steady performance in 2023, and despite the uncertain start to 2024 with the ongoing Red Sea crisis, our portfolio has continued to demonstrate resilience,” said chief executive Sultan Ahmed bin Sulayem, who did not attend the investor call.
He acknowledged the challenging geopolitical and economic environment causing uncertain outlook, but emphasised confidence in the industry’s medium- to long-term fundamentals.
