ABP cautious on profits growth rate
Associated British Ports expects to continue to increase profits in its core UK ports and transport business this year – but could not guarantee it would match the 8.5 per cent growth achieved in 2001. Operating profits from continuing operations in the UK ports and transport business rose from £126.5m ($180.5m) to £137.2m in the year to December 31.
The sale of the Red Funnel ferry operation meant that pre-tax profits fell from £138.9m to £129.5m. However, profit before goodwill amortisation and exceptional items rose from £124.3m to £130.4m. Turnover rose from £428.4m to £445.6m. Total throughput in the UK ports business slipped from 127m to 125m tonnes.
Bo Lerenius, chief executive, said 2 percentage points of growth in operating profit in the UK ports and transport division had come from new customer contracts that became operational in 2001. The remainder came from growth generated by other parts of the ports business. He said contracts that became operational last year, and those starting this year, would mean growth in the division’s operating profit of 3.1 per cent in 2002. Mr Lerenius said he was “cautiously optimistic” on the growth outlook in the division this year, while he also expected improvement in the US ports. He said ABP had received several bids for its US aviation services business and expected to receive more.
The company had not held talks with Simon Group on acquiring its Humber Sea Terminal, nor had it held talks with any possible bidders for Simon.
A final dividend of 7.75p gives a total of 13.75p (12.75p), payable from earnings of 29.1p (31.8p).
Comment
Tough market conditions could make it harder for ABP to win new customer contracts this year and push through volume increases at its ports. But it believes things have started well so far. It has already contracted for 50 per cent of its budgeted UK ports business this year. 2002 budgeted turnover already contracted for. Analysts are forecasting profit before goodwill amortisation and exceptional items this year of £133m-£134m, or about 30.5p a share. On yesterday’s closing price of 430p, up 5p, the shares trade on a forwardp/e of 14.
The premium to Mersey Docks and Forth Ports is justified, but until economic conditions improve, or ABP moves ahead with its next phase of growth which could mean investment of £1bn over the next eight to 10 years backed by customer contracts a significant re-rating is unlikely.
