P&O Ports star performer in group half-year report

Excluding the Maritime Services business, where P&O’s 50% interest in International Offshore Services was sold on 30 June 2003, operating profit increased by 30% to £68.9m (from £52.8m previously). The performance would actually have been better – a 40% increase – had adverse currency movements not come into play to the tune of £5.4m.

Container throughput across the group’s 27 worldwide container terminals increased by 27%, compared to the previous half-year period, to a record level of 6.6mTEUs. Organic growth volume growth was 16%.

Reviewing performance on a regional basis, P&O notes that strong growth was evident in Asia with 20% organic growth part of this. Operating profit increased 23% to £41.1m (previously £35.5m). In China, significant growth was achieved at Qingdao following the handover of an additional four berths, making eight in total, and at Shekou where a new facility became fully operational in February. Nhava Sheva, continued to operate at full capacity while positive growth was also achieved at Chennai, and in Port Qasim, Pakistan.

Laem Chabang, Thailand, also operated at full capacity but July 2004 saw additional capacity made available through expansion into a nearby terminal.

In Indonesia, disappointing economic growth was cited as the main reason behind restrained traffic growth.

In the Americas, operating profit almost doubled to £8m (£4.4m formerly) and organic volume growth was 18%.

Notable features of operations reported here include completion of the construction of the core terminal at Port Newark, strong volume and profit growth at TRP in Argentina, and an agreement reached in Vancouver to double the size of the recently acquired terminal.

In Europe, organic growth of 13% was achieved and operating profit was £7.6m just up on the £7.5m for the same period the previous year.

In Australasia, organic volume growth of 12% was registered and operating profit increased to £12.2m (from £7.4m). P&O states in this respect that: “A much improved operational performance was achieved across the business, particularly in Sydney and Melbourne, and this resulted in greater incremental profit growth.”

Overall, Robert Woods, P&O chief executive, described the ports results as “excellent.”

Certainly, the performance of this core division played a major part in the P&O share price rising by 20p or 9.7% on the day of the announcement of the half-year report.

While overall, the P&O Group, incorporating ferry and property interests as well as ports, could not achieve a pretax operating profit (£6.1m loss compared with £3.3m profit a year earlier), analysts now expect P&O to deliver a pre-tax profit in the order of £112m, significantly up on the £80m pre-tax profit achieved in 2003. (see also India News for P&O Ports’ new developments).