In a little-noticed filing with the ASX early today, British transport group P&O has revealed a 50% jump in trading profits at its Australian port operations, confirmation that the cosy duopoly with Patrick Corporation is very profitable indeed.
Not so profitable or cosy though is the P&O cold store business in Australia which looks like losing profitable contracts with ‘big retailers’ over the next three years, a development that produced a write-down on its cold store businesses in Australia of more than $24 million.
The figures are contained in the P&O 2004 financial results released in London and in Australia. They show that the Australian port operations are one of the jewels in the P&O business, which has been gradually cutting its historic involvement in shipping for quay side and beyond transport and logistics businesses.
According to P&O its ports business here conducted through P&O Australia saw ‘trading profit” increase of 26.9 million pounds (17.7 million pounds in 2003) of almost $65 million, an increase of more than 50% on the year before. The 2004 contribution from Australia was the largest individual country result and as a region second to Asia. Australia’s contribution was larger than P&O’s American business.
So how does P&O stack up against its fellow duopolist? Well Patrick appears to be roughly twice as profitable. Here’s the Patrick annual report, which had this to say about the financial performance of its ports business in 2003-2004:
“Economic interest revenue from the Ports Division increased by 10% to $860.0 million and economic interest EBITA grew by 27% to $127.5 million. Earnings in the second half were $67.0 million, up 34% on the previous corresponding half. This strong result was principally driven by growth in international shipping volumes, further productivity improvements and the development of our port services and port-link activities. Container volumes through Patrick’s four terminals increased by 8% during the 2004 year. This is broadly in line with overall port growth.”
With Patrick enjoying an 8% growth in freight volumes in the year to September 30, P&O appears to have done a bit better with its 14% growth.