BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Tuesday, 4 September, 2001, 15:54 GMT 16:54 UK
P&O may cut loss-making ferries
P&O Stena ferry
P&O Stena: "Good result" given the fallout of foot-and-mouth
Shipping giant P&O is considering cut backs at its ferry operations, which have been hit by the slump in UK tourism blamed on the foot-and-mouth crisis.

Growing ferry division losses, which more than doubled to 18.1m between January and June, contributed to a 6.5% decline in P&O's pre-tax profits to 90.4m for the first half of 2001.

P&O, which is Britain's largest ferry operator, revealed it has undertaken a "detailed review" of the worst performing units in its loss-making ferries portfolio.

Although he declined to give details of possible rationalisation measures, chairman Lord Sterling said the ferry division "can play a key role in industry consolidation".

Ireland and Europe routes weak

The company said the P&O Stena Line unit had achieved a "good result", given the impact of foot-and-mouth on UK visitor figures.

But ferry operations on the UK-to-Ireland and Portsmouth-to-the-Continent routes, among others, have been struggling.

"Despite [foot-and-mouth] the underlying performance of our Western Channel and North Sea operations remains unacceptable," said P&O, which estimates it has lost 6m to the effects of the epidemic.

The foot and mouth outbreak is continuing to harm tourist traffic to the UK and was responsible for "a noticeable lack of Continental passengers at the height of the tourist season", the firm warned.

Ports growth

Although the ferry division's losses hit the company's financial results, it reported a brighter performance by its ports division, where operating profits surged by almost one third to 52.9m.

P&O credited the rise to growth in world trade, albeit at slower rates than in recent years, and success in grabbing market share from state-run ports.

A strong performance from Indian and Chinese operations helped the firm to offset poor performance at Argentine terminals caused by the country's economic turmoil.

The firm said the prospect of developing further ports concessions left the unit with "considerable upside potential".

"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," Lord Sterling said.

Steel slump

P&O's results statement came seconds after Associated British Ports Holdings, the UK's largest ports operator, revealed pre-tax profits up 8% to 66.5m.

Timber imports
Timber imports buoyed ABP trade

ABP admitted it too had been affected by the foot-and-mouth outbreak, which had affected volumes of agricultural products handled.

Capacity cuts announced by steelmaker Corus six months ago have also affected trade.

"In particular, the decision to cease steel production at Llanwern impacts on raw material imports through Port Talbot," Tuesday's statement said.

But the losses were balanced by growth in container shipments, and buoyant levels of coal, cars and timber.

Strong vehicle and coal imports in particular helped Grimsby & Immingham build on its position, won last year, as the UK's largest port.

In the City, ABP shares closed down 11.25p at 418.5p, while shares in P&O ended 2.25p lower at 228p.

See also:

20 Apr 01 | Business
Impact of farm disease 'slows'
18 Apr 01 | Business
BA's foot-and-mouth loss
19 Apr 01 | Business
Foot-and-mouth hits McDonald's
18 Apr 01 | Business
Nike foot-and-mouth warning
17 Apr 01 | Business
Retailers report good Easter
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories