P&O to rationalise through sales and a flotation
Peninsular and Oriental (P&O), the British shipping, construction and property investment group which owns 25 per cent of Shekou Port and has an interest in Hong Kong's Modern Terminals, is to rationalise its activities.
Chairman Lord Sterling said streamlining the company would come via property disposals, a flotation of its Bovis Homes house building activities and a partial withdrawal from bulk shipping.
In addition, its shipping interests - spanning ferries, cruise lines, container lines, and bulk cargo carriage - face an overhaul.
Despite announcing results yesterday which showed 1995 pre-tax profits down by 8.3 per cent to GBP320.4 million (about HK$3.80 billion), the group plans to boost its container activities in the region.
It enters one of the world's biggest alliances, with German operator Hapag Lloyd, Neptune Orient Lines of Singapore and Nippon Yusen Kaisha of Japan, in June.
'For the first time this will take P&O into the biggest trade lane in the world, the Trans Pacific, enabling us to make maximum use of our agencies and other facilities in the Far East and the USA to reduce average operating costs,' Lord Sterling said.
He said P&O soon would confirm an order for two new container ships, with an option on two more, as a result of its increased presence in the Trans Pacific shipping lanes.
He said cost reductions were necessary as increased tonnage entered the market, and despite world trade growing faster than world gross domestic product, rates were being rocked by 'a number of emergent lines, mainly Asian, seeking market share'.
'There is evidence that this process is beginning to mature as these independents have sought to join the trade lane agreements which stabilise rates,' he added.
P&O Australia, which is responsible for Shekou Port, saw profit climb to GBP45.9 million, from GBP44.2 million.
Its cleaning and catering operation, which has been expanding in the region, achieved record results in 1995, Lord Sterling said.
In exhibitions there was improvement in attendances, and the group recently won an important contract to manage, and take an equity stake, in Intex, an exhibition venue in Shanghai.