Weakening demand to hurt P&O Nedlloyd in second half

P&O Nedlloyd, the container and cargo group, buoyed fears of a crunch in the container industry after warning weakening demand and extra capacity would affect second-half revenues.

The company, which is a joint venture between Britain's Peninsular & Oriental and Royal Nedlloyd of the Netherlands, said it expected freight rates to come under pressure as new competitors enter an already crowded market.

Previously, P&O Nedlloyd had banked on its balance of trade to cushion it from the worst of an economic slowdown. However, yesterday's second-quarter results showed a 3 per cent drop in volumes on the profitable Asia-Europe route and a 5 per cent fall for the period in load factors, which measure how much cargo space is used.

P&O Nedlloyd, which contributes about 25 per cent to P&O's profits, posted a 14 per cent rise in pre-tax profit for the second quarter to $32m (£22m) on revenues up 4 per cent to $1.06bn. Yesterday P&O shares closed down 5p to 223p.

Separately, P&O Nedlloyd said plans to reverse into its partner and list the group on the Amsterdam Stock Exchange "were unlikely to proceed in the short term".