Britain's Peninsular and Oriental Steam Navigation Co (P&O) shrugged off higher fuel costs and fears of a downturn in the United States to beat forecasts with a 12 percent rise in profits. P&O, which last year shed its cruise liner division to concentrate on its core ports, container shipping and ferry businesses, announced pre-tax profits before exceptionals of 269 million pounds ($390 million). "These results are considerably better than what the market would have hoped for, despite last year's increase in oil prices," chairman Lord Sterling said
. "We are cautious regarding the U.S. economy, but the business we are doing in the (United) States is not in keeping with some of the current panic."
Sterling said the company was particularly pleased with the performance of P&O Nedlloyd
, its container shipping joint venture with Dutch company Royal Nedlloyd, but he called the present returns from the ferry arm inadequate. Operating profits from its 50 percent share of P&O Nedlloyd soared to 66 million pounds, up from one million pounds in 1999 -- a result achieved in spite of additional fuel costs shared between the two companies of 102 million pounds.
Operating profits from the ferry business -- the largest of its kind in northwestern Europe -- were 20 million pounds, knocked down from the previous year's 60 million pounds. The company blamed a 75 percent increase in fuel costs, the abolition in 1999 of duty free sales between European Union states and the weakness of the euro. Howard Wheeldon
, analyst at brokers Prudential-Bache, said P&O's results were very positive overall.
"They are taking aggressive action on ferries this year and it might be too early to say, but there's no sign yet of any downturn for them in ports or in fact any other parts of the group, so one can be pretty positive on this," he said. "This is a global group, from China across Europe to South America, and in India too, so they are very nicely spread," he said.
The ports business, seen as the most resilient to an economic downturn, saw its operating profit rise 40 percent to 102.5 million pounds. The company operates 29 container terminals in 16 countries and is keen to expand. "The ports division has a very spread portfolio which is always comforting in these unusual times," said Sterling, adding that it was looking to expand the business. In recent years, P&O has refocused its activities, jettisoning non-core businesses such as its property interests. - (Reuters)