P&O profits sink on ferry shake-up

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The Independent Online

P&O, the ports and ferries operator, plunged to a £210m loss last year after bigger-than-expected write-offs in its cross-Channel ferry business and a further decline in passenger numbers and freight shipping rates.

P&O, the ports and ferries operator, plunged to a £210m loss last year after bigger-than-expected write-offs in its cross-Channel ferry business and a further decline in passenger numbers and freight shipping rates.

The group also announced that it would not rule out a sale of its 25 per cent stake in the container shipping group P&O Nedlloyd, which was floated off from the main P&O business last year.

The increased loss last year - up from the £80m deficit reported in 2003 - represented a low note on which to bow out for Lord Sterling of Plaistow, who retires as P&O chairman in May and hands over to Sir John Parker.

P&O said trading conditions in the cross-Channel ferry market remained challenging but forecast that the business would break back into profit this year with the aid of a restructuring plan unveiled last September involving the loss of 1,600 jobs, the retirement of one-quarter of its fleet and the ending of services from Portsmouth.

Analysts had expected the rationalisation of the ferry operation to cost £240m but in the event P&O took a charge of £266m, taking total write-offs across the group to £380m.

Leaving aside the huge one-off charge, the ferry business made a trading loss of £15.4m in 2004 after having broken even the previous year. P&O's chief executive Robert Woods blamed the deterioration on a 3 per cent decline in passenger numbers, an 8 per cent decline in average freight rates and two increases in French tobacco duty, which hit on-board sales badly.

Mr Woods said pre-tax profits before the exceptional items rose 65 per cent to £170m, thanks to a strong performance from its ports business, which benefited from the cyclical upturn in container shipping.

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