P&O sailing in right direction

P&O said a strong performance from its ports business will offset the restructuring of its struggling ferry arm. The company also predicted it would meet its full-year profit forecasts. In a trading statement, which analysts described as 'uninspiring', the company said operating profit growth at ports would exceed volume growth, adding 2005 looked positive if exchange rates improved.

It claimed organic growth remained strong at the ports business, though congestion at some sites held back growth in October and November.

P&O is currently going through a restructuring of its ferry business, which will include cutting 1,200 jobs and slashing services to salvage the business.

However, its plans to transfer the Portsmouth to Le Havre route to Brittany Ferries has hit the rocks after the deal was referred to the Competition Commission.

It said: 'P&O remain confident of presenting a strong case but there will be a negative impact on results from operating the loss-making Portsmouth to Le Havre route during 2005.'

{1}The company said last month it saw no change in the expected annual results for its ferries and ports businesses, and peak season tourist vehicle and passenger ferry numbers were comparable to last year.

The group, which operates 27 container terminals and has logistics operations in 18 countries, has flagged higher container shipping volumes this year, particularly in China.

P&O, whose ferries carry passengers and freight between Britain and continental Europe as well as Ireland, said in September it would cuts its fleet to 15 ships from 23 ships and its ferry routes to nine from 13.Citigroup Smith Barney reiterated its hold stance on P&O shares. It said following outperformance in the last three months, it believes today's statement will 'lead to a period of reflection'.The stock fell 11p to 295p in early morning trading.