Associated British Ports Hldgs PLC
22 June 2004
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BEFORE 7.00 A.M. ON TUESDAY, 22 JUNE 2004
ASSOCIATED BRITISH PORTS HOLDINGS PLC
TRADING UPDATE - SIX MONTHS ENDING 30 JUNE 2004
In keeping with its usual practice, Associated British Ports Holdings PLC is
today issuing its trading statement for the six months ending 30 June 2004,
prior to the group's interim results announcement scheduled for 1 September
2004.
HIGHLIGHTS
The key highlights are as follows:
• Turnover from the core UK ports and transport activities for the six
months ending 30 June 2004 is expected to increase by at least 4 per cent
compared with the corresponding period
• Underlying operating profit from the UK ports and transport activities
for the same period is expected to grow by at least 2 per cent
• New contracts won in recent years will underpin growth in the group's UK
ports business during 2004
• £49.8 million of the £130 million share repurchase programme announced
during the first half of 2004 has been completed
PORTS AND TRANSPORT - UK
The UK ports business has continued to grow. Roll-on/roll-off trade, deep-sea
container traffic at the Port of Southampton, vehicle imports and exports, coal
imports, forest products and cruise-ship call volumes have all increased so far
this year. As a result, turnover from the group's UK ports and transport
operations for the six months to 30 June 2004 is expected to increase by at
least 4 per cent. Underlying operating profit is expected to increase by at
least 2 per cent.
As previously reported, the cost reduction programme implemented during 2003
will reduce the group's operating expenses by at least £3.0 million per annum
from the beginning of this year. However, these savings will not benefit
operating margins for the first half of the year due to growth in turnover at
ABP Connect, the group's lower margin value-added services operation, and
demurrage costs incurred by the Port of Immingham following strong demand for
imported coal.
In line with the group's strategy to grow existing business and develop new
business through rigorously targeted investment, new revenue-related investments
contracted so far during this year total more than £33 million. These projects
have construction lead times of up to 18 months and will only contribute to the
group's results once they become operational.
The group continues to plan major growth projects at its ports on the Humber
Estuary. The Department for Transport is currently considering the necessary
planning consents for the development of a shortsea container riverside terminal
at the Port of Hull and a roll-on/roll-off riverside terminal at the Port of
Immingham; decisions are expected this year. The group has already reached
agreement with DFDS Tor Line for the £27.5 million development of this roll-on/
roll-off facility, which will be built once Government consent is obtained.
Having already obtained approval to develop a further riverside terminal for
coal imports at the Port of Immingham, the group believes that the robust demand
for imported coal during the first half of the year strengthens the business
case for the development of this major new facility.
The development of a fourth riverside terminal at the Port of Hull continues to
be explored.
PORTS AND TRANSPORT - USA
The performance of AMPORTS, the group's ports and transport business in the USA,
has continued to improve. Vehicle volumes grew by 14 per cent in the first five
months of the year, led by increased Kia imports into AMPORTS' facility at
Baltimore, Maryland, and increased General Motors' imports into AMPORTS'
terminal at Benicia, California.
Notwithstanding the weakening of the US dollar against sterling, turnover from
ports and transport operations (which exclude property investment income) is
expected to be at least 10 per cent ahead of last year. Operating profit, which
has benefited from increased vehicle storage revenue and reduced overhead costs
following last year's streamlining and relocation of the head office to
Jacksonville, Florida, is expected to improve by at least 80 per cent on the
first six months of 2003.
PROPERTY INVESTMENT AND DEVELOPMENT
The group's policy of selling non-operational, port-located property and
exploiting the potential of its property portfolio continues. As previously
reported, operating profit from property investment rentals in the UK and USA
for the first half of the year will be lower than 2003 due to sales made last
year and during the course of this year.
Following the sale of Caspian Point, the group's last office development in
Cardiff Bay, to Norwich Union for £16.5 million in May, the group expects
turnover from property development to be substantially up on the corresponding
period one year ago. As the overall base sale price of all of the assets sold to
Norwich Union was broadly equal to their net book value, operating profit is
expected to increase modestly.
ASSOCIATES
While Southampton Container Terminals has experienced growth in container
throughput this year, volumes have been lower at Tilbury Container Services. In
addition, ancillary income at Tilbury Container Services has decreased as a
result of reduced container storage. Accordingly, in overall terms, operating
profit from continuing operations of associates is expected to be close to the
first six months of last year.
The sale of the group's 45 per cent interest in the Cardiff Bay Partnership to
Norwich Union was completed in May. Up to the date of sale, the Cardiff Bay
Partnership contributed a similar amount to group operating profit as in the
corresponding period of 2003. It will now be reported as a discontinued
operation.
EXCEPTIONAL ITEMS
In April, the Government rejected the group's application to develop the Dibden
Terminal deep-sea container port at Southampton. As previously reported, the
group will write off substantially all of the related £45 million of capitalised
costs in this year's interim results.
NEW ACCOUNTING STANDARDS
The group will adopt Financial Reporting Standard (FRS) 17 - Retirement Benefits
in full in 2004. This will not affect the group's cash flow but will reduce
pre-tax profit for the first six months of 2004. Pre-tax profit for the
corresponding period in the previous year will be adjusted and reduced by £5.4
million for comparative purposes.
The 31 December 2003 actuarial valuation of the group's main defined benefit
scheme has been completed and as a result, the group will maintain its
contribution holiday over the next three years. The group's FRS 17 surplus as at
31 December 2003 was £34.4 million.
SHARE REPURCHASE PROGRAMME
In April, following the Government's decision to deny approval for Dibden
Terminal, the group announced its intention to commence a new £100 million share
repurchase programme to increase the efficiency of its capital structure.
Following the sale of its property interests in Cardiff Bay, the group extended
this programme in May by a further £30 million. To date, the group has completed
£49.8 million of this programme by repurchasing 11.3 million shares at an
average price of 439 pence per share, before costs.
CHAIRMAN
Following the retirement of Ross Sayers as Chairman at the Annual General
Meeting in April, the process of selecting a new Chairman is under way; progress
will be reported in due course.
PROSPECTS
The Government's decision on Dibden Terminal will have no significant short-term
impact on the group's underlying UK ports business; in the medium-term, the
group will continue to concentrate on the development of its major growth
projects on the Humber Estuary.
The group's UK ports business is expected to grow by at least 2 per cent in the
first half of 2004. The group also has the competitive advantage of many
long-term contracts with quality customers. This leads the board to continue to
believe that the new contracts secured over recent years will underpin growth in
the UK ports business in 2004.
- ends -
Enquiries:
Associated British Ports Holdings PLC
Bo Lerenius, Group Chief Executive tel: +44 (0)20 7430 1177
Richard Adam, Group Finance Director
Margie Collins, Corporate Communications Manager
Finsbury
James Murgatroyd tel: +44 (0)20 7251 3801
James Leviton
22 June 2004
Notes to Editors:
Associated British Ports Holdings PLC is a leading provider to ship and cargo
owners of innovative and high-quality port facilities and services.
The group's principal subsidiary, Associated British Ports (ABP), is the UK's
largest and leading ports group, handling almost a quarter of all seaborne
trade.
The group owns and operates AMPORTS in the USA, which handles car imports and
exports and provides auto-processing services.
The group's property investment and property development activities are focused
on opportunities within its ports.
The group employs around 3,000 people, mainly at port locations in the UK and
USA.
This, and other news releases relating to the group, can be found at
www.abports.co.uk
Photographs:
Print resolution images of Bo Lerenius, Group Chief Executive of Associated
British Ports Holdings PLC, operational management and general port scenes to
accompany this press release can be viewed and downloaded, free of charge, from
www.vismedia.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
