P and O profit fall is hidden by changes

Press, Volume CXI, Issue 32531, 15 February 1971, Page 17

P and O profit fall is hidden by changes

(N.Z.P.4. Staff Correspondent)

LONDON, February 14.

The group net profit of the Peninsular and Oriental Steam Navigation Company, Ltd, for the year to September 30 was £50,000 lower than in the previous year, according to a preliminary statement made by the company.

Pre-tax profits by the company for 1969-70 were £12,590,000 compared with £12,642,000 in 1968-69. .The dividend rate was held at 12 per cent on capital increased by a one-for-five script issue. A second interim dividend of 7.5 per cent was declared in lieu of a . final dividend.

-Strict comparison of this year’s figures with last year’s is made difficult by two factors: firstly, the basis of depreciation was altered (which boosted profits by £900,000) and secondly, P and O made a non-recurring profit of £882,000, as a result

of the devaluation of the German mark.

Commenting on the P and O statement, the “Financial Times” said that the main question mark overhanging P and O’s future was to what extent the sale of the Union Steam Ship Company, and the purchase of two new supertankers would offset last year’s trading decline.

“For although 1970 preprofits are slightly ahead of last January’s forecast, the real fall over the 12 months of 1970 is hidden by savings of £l.B million from currency transactions and the different depreciation rate,” said the “Financial Times.” The point is that cargo liners, which make up virtually all of the Union’s fleet, have proved the sector’s most vulnerable area, with cost inflation especially vicious in stevedoring.” The “Daily Telegraph” said the figures could mean that P and O’s four-year run of rising profits has come to an end.

“Certainly it looks to be in for a choppy run in the first six months of the current year, with some massive cost increases,” said the newspaper.

The “Daily Mail’s” city editor, Patrick Sergeant, said the burning question was how long P and O must wait to make money from containers, and how long it could hide the awful losses on them.

Sergeant said that Overseas Containers, Ltd—the consortium of P and O, Ocean Steam, British Commonwealth and Furness

Withy—would lose more than £4 million for the year to September, 1970. He said that there had been a significant shortfall on the number of trips each ship could make in a year to Australia, which meant that the facts on which investment decisions had been made were now incorrect.