More on Associated British Ports
Associated British Ports: Trading statement
Profits from property development are expected to drive Associated British Port’s earnings for the half year to June 2005. Underlying operating profits from property development are expected to reach at least £5m compared to £0.4m last year. Overall profits are expected to be ahead of consensus.
UK ports and transport activities are expected to report a 3% growth in underlying profits.
In the ports and transport business volumes have grown in both bulk and containerised cargo. Bulk cargo has been driven by coal and iron ore imports,
agribulk exports and steel products.
The the loss of Cobelfret, a major customer (from the Port of Immingham) is expected to result in lower roll-on/roll-off volumes and stevedoring activity. The lower level of activity has been offset by a pre-emptive cost reduction programme implemented in 2004.
Profits in the property development business will be driven by the sale of surplus land. Operating profit from property investment rentals in the UK and USA for the first half of the year are expected to be similar to the first half of last year.
Growth in the company’s core ports business has been slow and while property development makes a useful contribution activity will wind down as the company completes the disposal of its surplus land. Growth seems dependent on a project in Humber which is expected to contribute from 2006, if it is completed on schedule.
The share trades at 478p, on a prospective PE of 15.4x (2005 earnings), at the upper end of the sector range and discounts much of the long term growth. The yield is 3.5%.
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