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Last Updated: Thursday, 11 August, 2005, 10:31 GMT 11:31 UK
P&O 'on track' to improve profits
A P&O ferry
Ferries have faced competition from budget airlines and Eurotunnel
UK ports and ferries operator P&O has unveiled a sharp dip in first-half earnings, but said it spied a strong profits recovery on the horizon.

Pre-tax profits were 30.6m, down from 53.4m at the same time last year, in line with market forecasts.

P&O has been selling properties and slashing jobs at its loss-making ferry operations as part of a shake-up.

Now it says it is "on track" to improve profits from its ferries by 50m a year from 2006 after restructuring.

The company was forced to rethink its strategy as budget airlines and the Channel Tunnel eroded its market share.

Over 1,000 job losses were announced in 2004 and P&O has since cut back on routes.

The final P&O voyage from Portsmouth to Le Havre will set sail at the end of next month.

Safely stowed

P&O's property disposal programme is ahead of schedule, the firm said, and revenue from the sell-off is expected to reach 400m this year, ahead of its target of 325m.

In June, the company offloaded its 25% stake in Dutch shipping company P&O Nedlloyd, leading to a 187.9m one-off gain.

The overall outlook for the second half is positive
Robert Woods, chief executive

Group operating profit from continuing operations fell to 78.4m, down from 96.7m last year.

Strong growth at Asian ports had offset more sluggish economic conditions in the UK and Australia, the company said.

Losses were narrowed at its cross-Channel ferry operations, though its performance was hampered by disruptions at the French port of Calais.

Difficult berth

Berthing problems at Calais meant 14% of sailings had to be cancelled. Passengers faced weeks of delays after a gangway rope collapsed.

Further problems were caused by striking SeaFrance crews who blocked access to one of the docks.

Meanwhile, higher fuel prices increased cost by 4m.

In July, P&O announced that the government was close to backing its plans for a 1.5bn container port and logistics centre near London.

P&O said earnings for the full year were on target to meet market forecasts.

"The overall outlook for the second half is positive," said chief executive Robert Woods.

"For the group as a whole, excluding property and container shipping, operating profit is anticipated to grow strongly for the full year compared to 2004."

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