P&O group narrows loss to ú9 million in first half
The Peninsular and Oriental Steam Navigation Co. group, the parent company of P&O Ports, narrowed its net loss to '9 million ($14 million) in the first half of the year, from '55.6 million in the corresponding period of 2002, as port activities, container shipping and bulk shipping all improved their operating results.
The group’s half-year revenues, including the share of revenues of joint ventures like P&O Nedlloyd, decreased by 11 percent over the same period, to '1.8 billion ($2.9 billion), from '2.1 billion. This reflected the sale of P&O’s contract logistics business. Putting aside the effect of this divestment, the group’s revenue from continuing activities was up 10 percent.
Group operating profit before financial items increased by 89 percent in the latest six-month period, to '45.1 million ($72 million), from '23.8 million a year ago.
P&O said that its improved operating results were due to strong growth in its port business and an upswing in rates in cargo shipping.
'The huge growth in trade from Asia is strongly benefiting our ports and shipping businesses, with most commentators forecasting this trend to continue for some considerable time to come,” said Jeffrey Sterling, chairman of P&O.
Breaking down its results by activity, P&O reported that its port arm had first-half revenues of '443.2 ($703 million), up 16 percent on the '383.1 million in the first half of 2002. Operating income from ports increased by 15 percent, to '58.9 million ($93 million), from '51.2 million, confirming that the port division is the largest profit contributor of the British group.
The share of the P&O group in P&O Nedlloyd represented a first-half revenue of '689.3 million ($1.1 billion), up 3 percent on the year-earlier period in local currency. The operating result from this venture amounted to a loss of '18.9 million ($30 million), as compared to a deficit of '47.9 million in the first half of 2002.
European ferries activities produced a first-half revenue of '505.7 million ($803 million), up 10 percent , and an operating loss of '17.5 million ($28 million), as compared to a deficit of '11.9 million for the same period in 2002.
Bulk shipping activities reported an operating income of '5.8 million ($9 million), in contrast to a '100,000 loss in the first half of 2002.
P&O said that it is continuing to direct capital to the strongest growing areas of its business, while exiting from, or reducing, investment elsewhere.
“Our top priority is to reduce our investment in P&O Nedlloyd,” the group said. “As the container shipping cycle is now in an upswing that is likely to last through 2005, the prospects of achieving progress are better than they have been for some time.”
The group invested '200 million ($317 million) in container terminals in the first half of the year. The group’s capacity will increase by approximately 4 million TEUs, or 24 percent, over the medium term.
P&O Ports' container throughput, calculated on a proportional basis when it holds shares in terminals, grew 28 percent in the first six months of this year, to 5.2 million TEUs. “Organic growth of 25 percent significantly exceeded estimates of growth in global containerized trade of approximately 10 percent in the same period,” the group said.
In the Americas, P&O Ports’ operating profit declined to '4.4 million ($7 million) in the first half of this year, from '6.7 million this time last year. “Ongoing construction work at the New York terminal continued to depress both productivity levels and earnings,” the group said.
Organic volume growth in containers in the Americas was 17 percent. P&O said that its new container terminal acquisition in Vancouver is progressing well, and that the position in Argentina has improved with respect to volumes, both import and export, and earnings.
P&O predicted that it would have a “significantly better result this year than in 2002.”