P&O GROUP REPORTS REPORTS 3% FALL IN HALF-YEAR PROFITS

P&O GROUP REPORTS REPORTS 3% FALL IN HALF-YEAR PROFITS    Peninsular & Oriental Steam Navigation Co., the U.K.-based shipping, port, logistics and property group, reported a 3 percent drop in net profit for the first half of the year, to '62 million ($90 million), caused mainly by lower results from property and ferries.
   The half-year results were the first since P&O de-merged its cruise shipping activities last October.
   Group revenue for the latest six-month period was '2.1 billion ($3.1 billion), up 6 percent from pro forma revenue of '2 billion, excluding cruise shipping, in the first half of 2000.
   Group operating profit decreased by 9 percent, to '136 million ($197 million), when compared with pro forma figures in the corresponding period last year.
   Broken down by activity, operating profit soared by 31 percent within P&O’s ports division, to '53 million ($77 million), while this division’s revenue increased by 32 percent, to '310 million ($450 million). P&O’s contract logistics business made an operating profit of '7 million ($10 million), compared with '5 million a year earlier, and reported a revenue of '366 million ($531 milllion) in the latest six months. P&O Nedlloyd, in which the P&O group has a 50-percent shareholding, earned an operating profit of '24 million ($35 million), up from '10 million. Ferries posted a loss of '18 million ($26 million), compared to a deficit of '7 million in the year-earlier period. Bulk shipping posted an operating profit of '7 million ($11 million), up from '4 million. Property saw its operating profit fall to '55 million ($79 million), from '92 million.
   “Despite the slower rate of growth in world trade, our ports and logistics businesses have shown considerable resilience and we are confident that they will continue to do well,” said Jeffrey Sterling, chairman of P&O. “Ferries and P&O Nedlloyd are facing a much more challenging environment but they are market leaders that can play a key role in further industry consolidation,” he added.
   P&O said that the main reason for its widening losses on ferry shipping was the outbreak of the foot and mouth disease in the U.K., which hit tourist passenger and vehicle traffic.
   On the P&O Nedlloyd Container Line joint venture, P&O said that “good progress was made in attacking costs.” But P&O warned that the joint venture’s short term trading outlook “is less positive.” Slower growth in world trade and new capacity entering the container shipping market are expected to impact future load factors and revenue adversely, it said.
   P&O and Royal Nedlloyd, the two parent companies of P&O Nedlloyd, recently announced that they had failed to reach agreement on the so-called reverse listing restructuring of the joint venture. The financial transaction would have made P&O Nedlloyd a publicly-listed company.
   “With its strong balance sheet and cash flow, there is significant value contained in P&O Nedlloyd,” P&O said. “P&O is not prepared to see this diminished through the adoption of sub-optimal corporate structures or to have unacceptable limitations placed on the rights attaching to its holding.”
   However, P&O said that it will continue to consider further industry consolidation in container shipping. “In due course we will look to reduce our shareholding but we are not prepared to sacrifice shareholder value in the process,” P&O said.