The Investment Column: Associated British Ports

BO LERENIUS, the new boss of Associated British Ports, has plenty to do at the country's leading handler of seaborne trade. ABP yesterday unveiled an 8 per cent drop in first-half pre-tax profits to pounds 52.7m following higher interest charges. Lower returns on property development also left their mark. The City marked the shares down 21p on the news to 319p. Should investors jump ship?

Of special concern to investors is last year's pounds 109m acquisition, perceived as too expensive, of US car-handler American Port Services. Mr Lerenius admits it will be a tough slog to boost US business.

The core UK operations, principally the running of 23 ports, appear sound, however. Revenue per tonne gained in the first half, even as volumes slipped. There is guarded optimism too about the property development operations, which should see a clutch of second-half sales extend profit beyond last year's pounds 6.8m. The group also pledges to push on with share-buybacks, with a further pounds 33m to follow the pounds 117m spent in the 15 months to June.

While the initiatives are positive, they will take time to bear fruit. Forecasts estimate full-year pre-tax profit at pounds 114m and earnings per share at 24.4p. After their recent ride above pounds 3, the shares appear pricey. Investors should take profits.